Illi)5tfMve 


COIVIPLETE    COORS 


REVISED    AND    ENLARGED 


LIBRARY 

OF  TIIK 

University  of  California. 

Class 


MODERN  Illustrative  I-ookki-eplng 


COMPLETE    COURSE 


BY 


E.    VIRG  L    NEAL    and    C.    T.    CRAGIN 


REVISED    AND    ENLARGED 


1!V 


D.    D.   MUELLER    and    J.    E.    KING 


SCRIPT   ILLUSTRATIONS    BV    E.    C.    MILLS 


:•  CINCINNATI  •:-  CHICAGO 

^     BOOK    COMPANY 


Oui 


W'..UAMS   &    ROGERS 

■9°'.   1909,  Axo 
W.P.I 


PREFACE 

s  book  is  designed  to  teach  bookkeeping  and  accounting  in  a  rational  \\  a , ,  and  in 
mce  with  the  practices  of  progressive  business  houses  and  leading  accountants.     No 

:.•  wasted  on  unnecessary  theorizing.     The  student  is  given  actual  liookkeeping  work 

^r-om  the  very  outset,  and  is  made  to  feel  at  all  times  that  his  work  is  similar  in  reality 

,   portance  to  that  which  is  done  in  the  business  office. 
;cial  attention  is  called  to  the  teaching  plan  of  the  book,  which  embraces  the  presen- 
')f  one  principle  at  a  time,  an  explanation  of  the  principle,  followed  by  a  script  illus- 

:  and  the  employment  of  the  principle  in  such  a  way  that  it  may  be  mastered  easily 
licklv.  Thus  the  student  is  grounded  thoroughly  in  the  principles,  and  is  given 
])ractice  in  bookkeeping  and  accounting  at  every  stage  of  the  work.  The  aim  of 
hors  has  been  to  present  the  subject  in  such  a  simple  and  logical  manner  that  the 
:  can  readily  understand  it. 
the  preparation  of  the  transactions  which  form  the  basis  of  the  student's  work,  and 

:   the  exercises  for  supplementary  practice,  great  care  was  taken  to  grade  them  prop- 
d  to  make  them  conform  to  modern  business  customs. 
I  models  of  books,   statements,  and  balance  sheets  illustrated  throughout  the  book 

.:nt  the  best  current  forms  for  the  various  purposes  for  which  they  are  designed  to  be 
The  incoming  vouchers,  which  form  a  part  of  the  business  practice  feature  of  the 
ire  made  out  practically  complete ;  and,  like  the  forms  for  outgoing  papers  to  be 
nit  by  the  student,  are  facsimiles  of  similar  documents  used  by  the    best   business 

:  principles  of  double-entry  bookkeeping  have  undergone  no  change  since  they  were 
ited  several  centuries  ago,  but  many  changes  have  taken  place  since  then,  and  espe- 
luring  recent  years,  in  the  application  of  these  principles,  and  in  bookkeeping  and 
:ting  practices. 

is  book,  in  its  original  form,  was  the  first  bookkeeping  textbook  published  for  use  in 
iian  schools  to  present  the  modern  forms  of  trading,  and  profit  and  loss  statement,  and 
■ "  sheet,  thereby  recognizing  the  changes  which  had  taken  place  in  these  important 
s  of  accounting  practice  in  this  country,  as  the  result  of  the  then  recent  adoption  of 
porate  form  of  business.     For  obvious  reasons,  the  authors  omitted  the  accounting 
logy  in  connection  with  the  new  forms,  and  used  bookkeeping  terms  instead.     In 
/ised  edition,  accounting  terms  are  used  in  the  more  advanced  part  of  the  book,  and 
jgjins  of  statements,  balance  sheets,  and  books  of  original  entry  have  been  changed  to 
.    g.  I'ith  the  best  current  practice. 

;  entire  book  has  been  revised  and  enlarged,  both  as  regards  the  text  matter  and  the 
or  the  student,  and  the  special  lines  of  business  treated  in  the  advanced  part  have 
(-jjg,  ranged  in  progressive  order. 

Qj^  |he  revision  of  the  book,  valuable  assistance  was  received  from  leading  mercantile 
'our  'lufacturing  concerns,  and  from  accountants  and  commercial  teachers,  to  all  of  whom 
(^g^fisers  desire  to  acknowledge  their  obligations,  and  to  express  their  sincere  thanks 
courtesies  extended. 

3  (complete) 


.,'P 

rst 


223780 


TO    THE   STUDENT 


Accuracy  is  the  first  essential  of  business ;  without  it  you  cannot  hope  to  hold  a  paying 
position  in  the  commercial  world.  Accuracy  can  be  accjuired  only  by  painstaking,  thought- 
ful work  on  \  our  part  from  the  start.  Read  carefully  all  instructions,  and  do  just  as  vou 
are  told  to  do. 

Do  not  make  mistakes  in  simple  mathematical  operations.  Errors  in  addition,  subtrac- 
tion, and  multiplication  are  inexcusable,  and  will  not  be  tolerated  in  business.  Vcnj'y  till 
additions  and  multiplications.     Kmno  you  are  right  before  \'ou  go  ahead. 

Neatness  and  Legibility. — A  neat,  legible  style  of  handwriting  which  can  be  executed 
at  a  fair  rate  of  speed,  and  absolute  legibility  in  figures,  are  necessities  in  the  modern  office. 

The  acquirement  of  these  attainments  will  necessitate  constant  practice  on  the  part  of 
most  students.  The  script  illustrations  in  the  book  are  excellent  models  to  follow.  Do  not 
allow  yourself  to  do  careless  and  slovenly  work  cither  in  writing  or  in  making  figures. 

Ruling  should  be  done  in  red  ink.  The  metal  or  thin  edge  of  the  ruler  should  be  used 
to  guide  the  pen,  the  ruler  being  placed  with  the  beveled  side  on  the  paper  and  the  metal 
edge  up  and  farthest  from  you.  This  will  prevent  the  ink  fiom  collecting  on  the  ruler  and 
dropping  on  the  paper.  It  will  also  enable  you  to  draw  double  lines  without  moving  the 
ruler  for  the  second  line,  by  holding  the  pen  at  a  slightly  different  angle. 

The  ruled  lines  should  be  of  uniform  thickness,  neither  too  heavy  nor  too  light.  Many 
bookkeepers  make  them  about  as  heavy  as  the  vertical  red  lines  in  the  blank  books;  but  it 
is  perhaps  better  to  make  tiiem  about  twice  as  heavy  as  those  lines.  In  double  ruling,  the 
two  lines  should  be  reasonably  close  together,  but  not  so  close  as  to  look  like  one  hea\y  line. 

Ruling  should  be  done  very  neatly  and  carefully.  When  so  done  it  will  greatly  enhance 
the  appearance  of  a  set  of  books.  On  the  other  hand,  the  appearance  of  an  otherwise  neat 
set  of  books  may  be  ruined  by  careless  and  slovenly  ruling. 

Details.  —  Inability  to  estimate  the  importance  of  a  thorough  mastery  of  detaiyiis  the 
cause  of  more  failures  in  life  than  all  other  causes  combined.     Learn  to  pay  attcnron  to 


the  little  things.     Follow  your  instructions  implicith- ;  do  not  be  content  with  doing 


nearly  right,  but  do  it  exactly  right.     Remember,  "  Perfection  is  made  up  of  trifles,  b  il  per 


fection  itself  is  no  trifle."     The  successful  business  man  must  master  multitudinous  ( 


thing 


tail. 


MODERN  ILLUSTRATnE  BOOKKl-EPIXG 

Bookkeeping  consists  in  making  a  systematic  record  of  business  transactions. 

The  Object  of  Bookkeeping  is  to  show  the  proprietor  at  any  time  wliether  his  business  is 
being  conducted  at  a  profit  or  a  loss ;  to  indicate  the  sources  from  which  the  profits  and 
losses  arise ;  and  to  afford  a  record  of  all  debts  owed  by  the  business,  and  of  all  debts  due 
and  all  property  belonging  to  the  business. 

Single-Entry  Bookkeeping  usually  provides  for  keeping  accounts  with  persons  only. 

Double-Entry  Bookkeeping  provides  for  keeping  accounts  with  persons,  property, 
expenses,  and  allowances. 

The  Books  Required  depend  upon  the  nature  of  the  business,  but  a  complete  record  of 

any  business  may  be  kept  in  two  books  —  the  journal-daybook  and  the  ledger. 

The  Journal-Daybook  contains  a  record  of  all  transactions  in  the  order  in  which  they 
took  place,  and  also  the  names  of  the  accounts  affected  by  each  transaction,  showing  which 
accounts  are  debited  and  which  are  credited. 

The  Ledger  contains  all  the  accoimts  named  in  the  journal-daybook,  and  records  the 
same  debits  and  credits,  but  in  a  different  arrangement.  Each  debit  is  carried  from  the 
journal-daybook  to  the  debit  or  left-hand  side  of  the  proper  ledger  account,  and  each  credit 
to  the  credit  or  right-hand  side ;  so  that  a  ledger  account  will  show  all  transactions  by  which 
that  account  has  been  affected  in  the  course  of  the  business  as  recorded  in  the  journal- 
daybook. 

EXERCISES   FOR   THE   STUDENT 

Ex.  1.  — On  a  sheet  of  journal  paper  copy  neatly  the  model  journal-daybook  shown  on 
pages  6  and  7,  following  carefully  the  script  forms  of  both  letters  and  figures.  Always  write 
the  current  year  in  full,  instead  of  19 — . 

Ex.  2.  —  On  a  sheet  of  ledger  paper,  rule  clear  across  the  page,  in  red  ink.  double  lines 
exactly  in  the  middle  of  the  spaces  between  blue  lines,  as     Blue  line 

1-11  1        /T^        1  •  T-.     1-         \  =    Double  red  line 

here  illustrated.     (Read  page  4,  section  on  Ruung.)  Blue  line 

Ex.  3.  —  On  a  sheet  of  ledger  paper  copy  carefully  the  model  ledger  shown  on  pages 
S  and  9,  writing  four  accounts  on  a  page.  Make  the  ledger  headings  larger  than  ordinary 
writing;  write  each  one  on  a  blue  line,  and  center  it  so  that  the  triple  vertical  line  will 
come  exactly,  or  nearly,  in  the  middle  of  the  heading.  Rule  a  double  red  line  in  the  space 
under  each  heading,  except  the  one  at  the  top  of  the  page,  as  in  Ex.  2.  In  the  account  at 
the  top  of  the  page,  write  the  finst  entry  (month,  day,  folio,  and  amount)  on  each  side  on 
the  first  blue  line  under  the  heading,  and  write  the  year  in  the  blank  space.over  the  month, 
In  other  accounts,  write  the  first  entry  on  the  second  blue  line  under  the  heading,  and  the 
year  on  the  first  blue  line,  over  the  month. 

Your  teacher  should  not  accept  your  work  in  these  exercises  unless  the  writing  is  legible 
and  neat,  the  figures  plain,  and  the  ruling  accurate. 

5 


MODERN   ILLUSTRATIVE   BOOKKEEPLNG 


/-. 


J.7/  /    /^     _ 


y/^^^U.^^, 


/-  x:^szl^^.,&< 


2  (?(?-«C-t^,  Ol^to^      ^.  Z? 


^  o  o  e> 


^ 


ACro 


/(?(?- 


>jr^- 


=y2>t£.c*^-^f<rf-,^,4^<^^-'rz-^'^      J'O 


^ 


f 


Jffffy 


/ 


J  a  a  a 


/A 


y<ri. 


i^j-ff 


ZZJ" 


^o 


'f^ 


3^<f 


MODEL  JOURN'AL-DAVBOOK 


ilcz<?^z^^.,i^g^.^l^  /  /  ,  / ^    - 


"^^.^^U^. 


V 


-/Saz^^^^y. 


Jl'e^c'-ii^-<^t!iyC-^^tZ'*t^r^i> 


/J- 


s^jr. 


^7 


/ 


/  tP  c 


/3 


.  yk^6^^. 


2e 


■^,^...6^<yt^trr^e^<r-^i^  •'  f'f 


z^ 


(y^/<^£^?z^  .<::lt:>-i^<p->iy':z^of>^/^^. 


/  i>  £: 


/  fif^ 


rza 


^^^i;6^L^^, 


so 


J/ 


— i^r'i^.  v.^^?*^-4^ 


^ZJ 


.  r:/a^/eiyi'C^^^^^^ '^'^^^'^^^       <^  "^ 


Z3  7^'' 


•3/ 


zjp^  sa 


6  fi\ 


MODERN    ILl.LSTKATIVt:    lii  )i  )KKi:i:Pl.\G 


.<«-«-;■  J" 


/ 


/J 
J- 


'    7       - 


J 
,f- 
/  /' 

J  ,7 

/z 


z 

'  zi\ 


/ 


/    3  t?  a  J) 


I      r     t    i 


Z      ^rf 


'7' 


Z2S- 
J3<f 


Moi)i;i.  i.i:i)GER 


~T" 


T^-- 


L^ 


^S^- 


/I 


-liyZ^'-^Z.^iy-L^ 


3y3lf^ 


/^fy^a 


jjy. 


^  w! 


.z^ 


J^^ 


^11    ^Zff 


^^^..-.^.  O: 


'.O  o 


/ 


■>y^ 


■i 


•^^ 


/- y-i 


FI.OL'R    AND    (]R.\IN    BUSINESS  —  JANUARY 


JOURNALIZING 
Journalizing  is  the  process  of  determining  the  debits  and  credits  of  business  transactions. 

General    liiilc  for   JoiiriKiliziug 


Debit  what  comes  into  the  business 
or  'ivhat  costs  viiluc. 


Credit  what  goes  out  of  the  business 
or  what  produces  value. 


Make,  on  journal  paper,  the  journal-daybook  entries  required  for  the  following  transac- 
tions, similar  in  form  to  those  shown  in  the  model  journal-daybook  on  pages  6  and  7. 

No.  1. — Jamakv  I,  19  .  I  (your  name)  engage  in  the  Flour  and  Grain  business, 
investing  cash,  $4000. 

Instructions.  —  First  wuiQ  Januarj  i  and  the  current  year  on  the  blue  line  at  the 
top  of  the  first  page  of  your  journal-daybook.     This  shows  the  date  of  the  transaction. 

Next  consider  what  account  is  to  be  debited.  Remember  that  you  should  debit  what 
the  business  receives,  or  what  comes  into  the  business.  In  this  instance  cash  to  the  amount 
of  S4CHX)  has  come  into  the  business,  hence  Cash  should  be  debited.  Do  this  by  writing  the 
word  Cash  at  the  loft-hand  side  of  the  first  wide  column,  and  4.000  on  tlie  same  line  in  the 
left-hand  money  column.     The  left-hand  side  is  the  debit  side. 

Whatever  or  whoever  produces  value  for  the  business  should  be  credited.  In  this  trans- 
action the  proprietor  has  produced  value  for  the  business  to  the  amount  of  $4000  by  giving 
that  sum  of  money  to  the  business  as  an  investment ;  hence  the  Proprietor  s\io\\\&  be  credited. 
Do  this  by  writing  your  name  (you  are  the  proprietor)  on  the  line  below  the  debit  entry, 
about  half  an  inch  to  the  right  of  where  the  word  Cash  begins,  and  writing  4000  in  the 
right-hand  money  column,  on  the  same  line  with  your  name.  The  right-hand  side  is  the 
credit  side. 

In  the  second  wide  column  write  a  brief  record  of  the  transaction,  as  in  the  illustration 
below;  this  illustration  shows  the  form  of  the  whole  entr}-,  though  the  amount  and  the 
proprietor's  name  are  different. 


3J-c!  C 


^S0  c 


10 


JOURNALIZING  —  JANUARY 


11 


The  daybook  part  ofthis  entry  consists  of  the  explanatory  record  ••Commenced  the  Flour  and  Grain  business. 
investing  cash,"  together  with  the  amount,  $3500.  The  journal  entry  would  be  read  or  stated  as  follows: 
•■  Cash.  To  F.  W.  Leonard,  S3500."  The  name  of  the  account  debited  is  always  read  first,  followed  by  the  word 
"To"  and  the  name  of  the  account  credited.     The  amount  is  named  but  once. 

For  the  sake  of  brevity,  tlie  journal-daybook  is  often  called  simply  the  journal. 

The  amount  placed  in  the  left-hand  money  colimin  of  your  journal  (the  debit)  should  be 
the  same  as  that  placed  in  the  right-hand  column  (the  credit);  in  other  woriXii,  your  titbits 
and  credits  should  always  be  equal .  From  the  bookkeeper's  point  of  view,  every  business 
transaction  is  an  exchange  of  equal  values.  . 

Rule  1.  —  Debit  Cash  for  all  cask  received. 

The  term  "cash"  includes  specie  (gold,  silver,  nickel,  and  copper),  treasury  notes, 
national  bank  notes,  gold  and  silver  certificates,  checks,  post-office  money  orders,  express 
money  orders,  bank  drafts,  and  certificates  of  deposit. 

Hale  2.  —  Credit  the  Pa'opkietok  with  all  avtounts  'which  he  invests  in  the  business. 

No.  2.  —  January  2.     Paid  J.  C.  Smith  §75  for  rent  of  store  for  this  month. 

Instructions.  —  Rent  is  one  of  several  expenses  incurred  in  carrying  on  a  business. 
Whatever  costs  the  business  value  should  be  debited.  In  this  instance  you  have  paid 
S75  rent  for  the  benefit  of  the  business.  This  expense  has  cost  the  business  value,  hence 
llxpciise  should  be  debited. 

Cash  has  gone  out  of  the  business,  hence  Cash  should  be  credited. 

The  following  illustrates  the  form  of  your  entry,  though  the  amount  and  explanation 
tre  different. 


/  e>  0 


/  c  c 


Before  attempting  to  make  your  entry,  examine  the  model  journal-daybook  on  page  6, 
as  well  as  the  above  illustration,  so  as  to  be  sure  of  the  form  and  arrangement.  Never 
copy  the  illustrations,  but  make  entries  similar  to  them.  Your  entries  must  be  made  for 
the  transactions  given,  and  your  amounts  must  be  the  amounts  given  in  the  transactions, 
and  not  the  amounts  shown  in  the  illustrations. 

After  each  entry,  leave  one  line  blank,  except  that  the  day  of  the  month  should  be 
written  in  the  center  of  this  line. 

liHle  3.  —  Debit  Expexse  for  all  the  expenses  of  the  business. 

The  term  "expense"  comprises  such  outlays  as  for  rent,  postage  stamps,  stationery, 
I  [fuel,  light,  clerk  hire,  and  advertising  —  all  for  the  use  or  benefit  of  the  business. 

RtiJc  4 Credit  Cash  for  all  cash  paid  out. 

No.  3.  —  January  2.  Bought  of  Scrantom  &  Wetmore  books  and  stationery  for  office 
ise,  for  which  I  paid  cash,  S  15. 

Instructions. — This  transaction  is  of  the  same  nature  as  the  preceding  one.  Debit 
^jcpense  (see  rule  3);  credit  Cash  (see  rule  4), 


MODERN  ILLUSTRATIVE   BOOKKEEPING 


The  explanation  written  in  the  second  wide  column  in  your  journal-daybook  should  be  a  complete  record  of 
c  transaction.  This  explanatory  record  should  be  as  brief  as  possible,  yet  it  must  show  exactly  what  took 
ace,  for  should  any  dispute  arise,  this  is  the  record  that  will  be  used  as  evidence  —  not  the  journal  entry 
)r  the  ledger  record. 

The  explanatory  record  for  transaction  No.  3  should  be  as  follows :  Bot.  of  Scrantom  &  Wetmore.  for  cash, 
)oks  and  stationery  for  office  use. 

No.  4. — Janl'.\kv  3.  Bought  of  the  Upton  Coal  Co.,  for  cash,  for  use  in  store,  5  tons 
:  coal  at  $5.50  per  ton;  total,  S27.50.. 

Instructions. — As  the  coal  is  to  be  used  for  fuel,  in  carrying  on  the  business,  it  is  an 
vpense.  Make  entry  similar  to  those  for  transactions  Nos.  2  and  3.  Determine  the  debit 
Y  rule  3  ;  detertnine  the  credit  by  rule  4. 

No.  5.  — January  3.     Paid  $10.50  for  500  stamped  envelopes. 

No.  6.  — January  4.  Bought  of  P.  D.  Hamlin,  for  cash,  100  brls.  flour  at  S3. 90  per  brl., 
30  bu.  oats  at  35^  per  bu. ;  total  S530. 

Instructions.  —  Goods  which  you  buy  with  the  intention  of  selling  are  called  "  mer- 

landise."     You  have  bought  $5 30  worth  of  flour  and  oats  for  this  purpose,  and  as  the 

erchandise  has  cost  the  business  value,  I\Icrchandise  should   be   debited.     Cash   to   the 

nount  of  $530  has  gone  out,  hence  Cash  should  be  credited.     The  following  is  the  form 

your  entry,  though  the  amount  and  explanation  are  different. 


-^a-J^ 


-^z^ 


^^i.^>-         fS<? 


r..^ 


/■ 


\j-<p 


liiilr  .».  —  Debit  Merchandise  for  the  cost  of  all  goods  zvliich  you  buy  for  the  putfose 
■"  seiliii!^. 

No.  7. — January  4.  Bought  of  Charles  A.  Hubbard, for  cash,  1000  bu.  oats  at  30^  per 
.1. ;  total,  $300. 

Instructions.  This  transaction  is  similar  to  the  ])receding  one.  Merchandise  should 
;  debited  (see  rule  5);   Cash  should  be  credited  (see  rule  4). 

No.  8. — January  4.     Bought  of  M.  F.  Lynch,  for  cash,  500  bu.  corn  at  35^  per  bu.  ; 

ital,  S175. 

Instructions. —  Make  entry  similar  to  that  for  transaction  No.  6.  Determine  tlie  debit 
y  rule  5  ;  determine  the  credit  by  rule  4. 

No.  9.  — January  4.  Bought  of  H.  P.  Dennis  &  Co.,  for  cash,  100  bu.  rye  at  50^  per 
LI.,  50  brls.  flour  at  $4. 10  per  brl. ;  total,  $255. 

No.  10.  — January  5.  Sold  Wilson  Bros.,  for  cash,  100  bu.  rye  at  60 J^  per  bu.,  50  brls. 
our  at  S4.50  per  brl.  ;  total,  $285. 

Instructions.  —  Cash  should  be  debited  when  it  is  received,  or  comes  into  the  business  ; 
nd  Merchandise  should  be  credited  when  it  goes  out  of  the  business  or  produces  value. 


POSTING  — JANUARV 


n 


The  following  illustrates  the  form  of  your  onlry,  though  tlie  amount  and  explanation  arc 
different. 


A^rj-. 


^/o- 


JJi/ic  a.  —  Credit  Merchandise  for  the  sale  price  of  all  goods  wliicli  yon  sell. 

No.  11. — J.\NUARY  6.  .  Sold  H.  A.  Harvey,  for  cash,  400  bu.  oats  at  35^  jier  bu.  ;  total, 
S140. 

■    Instructions.  —  Make  entry  similar  to  tliat  for  the  preceding  transaction.     Determine 
the  debit  by  rule  i  ;  determine  the  credit  by  rule  6. 

No.  12.  —  January  6.     Sold  \V.  D.  Mcnter,  for  cash,  200  bu.  corn  at  40^  per  bu. ;  total 
SSo.     ( luitry  similar  to  that'for  transaction  No.  10.) 

No.  13. — January   6.       Sold    J.    B.    Ilamill,    for    (?ash,    200    bu.    oats  at  36^  per  bu. 
100  bu.  corn  at  40^  per  bu. ;  total,  $112. 


POSTING 

At  such  times  as  may  be  convenient,  the  bookkeeper  transfers  the  items  from  his  jour 
nal  (in  which  they  have  been  entered  daily  as  the  transactions  have  occurred)  to  the  ledger 
This  is  called  "  posting."  When  the  posting  is  completed,  all  the  debit  cash  items  in  the 
journal  will  appear  on  the  debit  side  of  the  Cash  account  in  the  ledger,  and  all  the  credit 
cash  items  in  the  journal  will  appear  on  the  credit  side  of  the  Cash  account  in  the  ledger 
(See  Cash  account  in  model  ledger,  page  8.)  All  debit  merchandise  items  in  the  journa 
will  appear  on  the  debit  side  of  the  Merchandise  account  in  the  ledger,  and  all  credit  mer 
chandise  items  in  the  journal  will  appear  on  the  credit  side  of  the  Merchandise  account  ir 
the  ledger;  and  the  same  will  be  true  of  E.xpense  account,  the  proprietor's  account,  anc 
all  other  accounts  of  the  business. 

Tliere  is  no  stated  time  at  which  posting  should  be  done.  In  tlie  busy  office  it  is  generally  done  at  ode 
times,  when  the  bookkeeper  is  not  otherwise  occupied,  but  it  must  be  completed  at  the  close  of  each  month,  ir 
order  to  lake  a  trial  balance. 

In  posting,  the  utmost  care  should  be  e.xercised  that  all  debit  items  shall  be  carried  to  the  debit  side  of  th( 
proper  accounts  in  the  ledger,  and  all  credit  items  to  the  credit  side  of  the  proper  accounts  in  the  ledger.  It  i; 
a  common  error  to  post  a  debit  item  to  the  credit  side,  or  a  credit  item  to  the  debit  side  of  an  account 
especially  when  the  posting  is  done  by  alternate  debits  and  credits.  The  progressive  bookkeeper  rarel\ 
posts  in  this  manner,  but  instead  posts  first  all  his  debits,  then  all  his  credits.  As  he  is  at  any  time  posting  tc 
only  one  side  of  the  ledger,  he  reduces  to  the  minimum  the  danger  of  posting  an  amount  to  the  wrong  side  o 
an  account. 

Opening  Ledger  Accounts.  —  Examine  the  model  ledger  on  page  8,  and  notice  the  forn 
and  arrangement  of  the  accounts.  On  a  sheet  of  ledger  paper,  open  accounts  as  follows 
At  the  top  of  the  first  page  write  your  own  name.     (For  form,  see  account  of  A.  H.  Harpei 


1-1 


M<ii)i  u\  II  i.rsTRATivt:  ijck:)KKI!;epin'g 


in  model  ledger,  page  S.)  bee  liKit  ilie  name  is  in  the  middle  of  the  line.  On  the  tenth 
line  below  write  Cash.  At  the  top  of  the  second  page  write  Merchandise ;  20  lines  below 
Merchandise  write  Expense. 

Rule  a  double  red  line  under  each  of  the  ledger  headings,  Cash  and  Expense,  as  directed 
in  Exercises  2  and  3  on  page  5.  Number  your  journal  pages  1  and  2 ;  number  your  ledger 
pages  I  and  2. 

Successive  Steps  in  Posting.  —  You  will  first  carry  all  amounts  in  the  debit  money  column  of 
your  journal  to  the  left-hand  or  debit  side  of  your  ledger.  All  amounts  in  the  credit  money 
column  of  your  journal  are  then  to  be  carried  to  the  credit  or  right-hand  side  of  your  ledger. 

First  Step.  — The  first  item  on  the  debit  side  of  your  journal  is  Cash,  $4000.  Turn 
to  the  Cash  account  in  your  ledger  and  write  the  amount,  4000,  on  the  debit  side  of  this 
account.  Write  the  page  number  of  the  journal  page  containing  this  debit  (/)  in  the  folio 
column  of  the  ledger,  and  write  the  date  of  the  transaction,  as  shown  by  the  journal  entry 
{Jati.  /)  in  the  date  column  of  the  ledger.  Write  also  the  current  year  above  the  first  entry 
in  the  date  column,  as  directed  in  Kxercisc  3  on  page  5.  The  following  shows  the  form  of 
your  ledger  entry.  (In  this  and  later  illustrations,  of  course,  the  current  year  should  be 
given  in  full.) 


^ 


■iiy>^  / 


i^ff  0  a 


\ 


/^^ 


l^<;z^  /-z^ 


A. 


Next  enter  the  page  number  of  the  ledger  page  containing  cash  account  (/)  in  the  folio 
column  of  the  journal.     The  following  shows  the  form. 


/ 


i^. 


^^tce^eii^'-fzZe/ 


y^t^i^y^t^' 


^ 


■^e>e>ff 


In  posting  always  write  in  the  folio  column  of  your  ledger  the  number  of  the  page  of 
the  journal  from  which  the  amount  is  posted,  and  write  in  the  folio  column  of  your  joumal 
the  number  of  the  page  of  your  ledger  on  which  the  account  is  written.  This  is  termed 
"  postmarking,"  and  is  done  to  make  it  easy  to  find  the  place  in  the  book  to  which  or  from 
which  any  item  has  been  jjosted. 

Second  Step.  —  The  next  debit  item  in  your  journal  is  Expense,  S/j.  Turn  to  your  Ex- 
pense account  in  the  ledger  and  write  js  in  the  amount  column  on  the  debit  side.     Write 


POSTING  —  JANUARY 


15 


the  journal  pag;e  number  (/)  in  the  folio  column,  and  the  date  of  the  transaction  i^Jan.  2  and 
the  current  year)  in  the  date  column.     The  following  shows  the  entry. 


^ 


Z^^^2^'y?^Z^£^' 


3<>2<Z 


/' 


Write  the  ledger  page  number  (^)  in  the  folio  column  of  your  journal.  (For  form  of 
folio  entry,  see  illustration  of  journal  in  first  step ;  also  see  model  journal  on  page  6.) 

Third  Step.  —  The  next  item  on  the  debit  side  of  your  journal  is  Expense,  $1$.  Turn 
again  to  the  debit  side  of  the  Expense  account  in  your  ledger  and  enter  the  amount  in  the 
money  column,  the  journal  page  number  in  the  folio  column,  and  the  date  (Jan.  2)  in  the 
date  column  of  the  ledger.  When  the  month  is  the  same  as  for  the  entry  just  above,  it  need 
not  be  written  again ;  but  the  day  must  always  be  written.  The  following  shows  the  Ex- 
pense account  as  it  should  now  appear  in  your  ledger. 


1 

0^ 

^ 

<^^ 

C^ 

'f  - 

z 

7^ 
/J- 

Write  the  ledger  page  number  in  the  folio  column  of  your  journal. 

Fourth  Step.  —  The  next  item  on  the  debit  side  of  your  journal  is  Expense,  $2j.so. 
Post  this  to  your  ledger,  as  previously  instructed.  Do  not  neglect  to  enter  the  journal  page 
in  the  folio  column  of  your  ledger,  and  the  ledger  page  in  the  folio  column  of  your  journal. 

Fifth  Step.  — The  next  item  on  the  debit  side  of  your  journal  is  Expense,  $io.jo.  Post 
as  before  to  the  left-hand  side  of  Expense  account  in  the  ledger ;  and  postmark  properly. 

Sixth  Step.  —  The  next  item  on  the  debit  side  of  your  journal  is  Mcreltandisc,  t530. 
Tiu'n  to  the  Merchandise  account  in  your  ledger,  and  post  this  item  as  previously  instructed. 
The  following  shows  the  form  of  the  entry. 


■t-i^Zy^-Z-g^C^LJ^^y 


4^ 


•J" J  a 


16 


MODERN   ILLUSTRATIVE   BOOKKEEPING 


Seventh  Step. — The  next  item  on  the  debit  side  of  your  journal  is  Merchaiidisc,  $joo. 
Post  this  according  to  previous  instructions. 

Eighth  Step.  —  The  next  item  on  the  debit  side  of  your  journal  is  J/i-rc/iant/isr,  $y-s- 
Post  this  properly. 

The  following  shows  Merchandise  account  as  it  should  now  appear  in  your  ledger. 


Ninth  Step.  —  The  next  item  on  the  debit  side  of  your  journal  is  Merchandise,  $2jj. 
Post  properly. 

Tenth  Step.  —  The  next  item  on  the  debit  side  of  your  journal  is  Cask,  $285.  Post  this 
to  the  debit  side  of  your  Cash  account,  writing  28j  in  the  money  column,  the  journal  page 
number  in  the  folio  column,  and  5  (the  day)  in  the  day  column.  This  ledger  account  should 
now  have  two  debit  items,  namely,  $4000  and  $28j.  Never  forget  to  postmark  the  journal 
as  previously  directed. 

Eleventh  Step.  —  The  next  debit  item  in  your  journal  is  Cosh,  $140.     Post  properly. 

Twelfth  Stei'.  —  The  next  debit  item  in  your  journal  is  Cash,  $80.     Post  properly. 

Thirteenth  Step. — The  next  and  last  item  on  the  debit  side  of  your  journal  is  Cash, 
%ii2.     Post  properly. 

Fourteenth  Step.  —  As  you  have  finished  posting  the  debit  items,  you  should  next 
post  the  credit  items  of  your  journal  to  the  credit  or  right-hand  side  of  your  ledger. 

The  first  credit  item  in  your  journal  is  that  in  which  you  are  credited  with  your  invest- 
ment, $4000.  This  should  be  transferred  to  your  account  on  the  credit  side  of  the  ledger. 
Remember  to  write  the  current  year  in  the  date  column  over  the  first  item  in  an  account. 
The  following  illustrates  the  form  of  the  ledger  entry. 

/ 


{■Oyft^f 


y^ 


/  \^o oA 


Be  sure  to  enter  the  journal  page  number  in  the  folio  column  of  the  ledger,  and  the 
ledger  page  number  in  the  folio  column  of  the  journal  opposite  your  name. 

Fifteenth  Step.  —  The  next  credit  item  in  your  journal  is  Casli,  $yj.  Transfer  the 
amount  to  the  credit  side  of  the  Cash  account  in  the  ledger. 

The  following  illustrates  the  form  of  the  Cash  account  in  your  ledger  as  it  should  appear 
at  the  present  time. 


TRIAL    liALAXLK  —JANUARY 


17 


T^ 


^-  ^  ^ 


'7    - 


/->■ 


Sixteenth  Step.  — Transfer  the  remaiiiint;  credit  items  of  your  journal  to  your  ledger. 
The  Cash  account  in  your  ledger  will  then  contain  eight  credit  amounts,  and  the  Merchan- 
dise account  four  credit  amounts. 

All  the  debit  items  of.  your  journal  have  now  been  transferred  to  the  debit  or  left- 
hand  side  of  your  ledger,  and  all  the  credit  items  to  the  credit  or  right-hand  side.  As  the 
amounts  in  the  debit  and  credit  columns  of  the  journal  are  equal,  it  is  evident,  if  you  have 
made  no  mistake  in  transferring  the  entries,  that  the  amounts  on  the  debit  and  credit  sides 
of  your  ledger  must  also  be  equal ;  that  is,  that  the  sum  of  the  amounts  on  the  debit  side  of 
your  ledger  should  equal  the  sum  of  the  amounts  on  the  credit  side  of  your  ledger.  To  as- 
certain if  this  is  true,  we  take  what  is  known  as  a  "  trial  balance." 


TRIAL    BALANCE 

At  the  top  of  a  sheet  of  journal  paper  write  the  words  Trial  B.ilaiice,  and  the  proper 
date.  Under  this  at  the  left-hand  side  of  the  wide  column  write  the  names  of  all  the  accounts 
that  appear  in  your  ledger,  with  the  ledger  pages  in  the  folio  column.  The  following  illus- 
trates the  form. 


^^^^i:^-^  J^^^^^^  ^,  /^    - 


The  names  of  the  accounts  in  your  trial  balance  must  be  the  names  of  the  accounts  in 
vour  ledger. 


18 


MODICKN    II.l.USTKATIVt;    BOOKKEEPING 


The  footing  of  the  debit  side  of  each  account  in  your  ledger  must  be  entered  in  the  debit 
or  left-hand  money  column  of  your  trial  balance.  The  footing  of  the  credit  side  of  each 
account  in  your  ledger  must  be  entered  in  the  credit  or  right-hand  money  column  of  your 
trial  balance. 

The  first  account  in  the  ledger  is  the  proprietor's  (your  own)  account.  There  is  nothing 
on  thje  debit  side,  hence  no  entry  will  be  made  in  the  debit  column  of  your  trial  balance  on 
the  first  line.  There  is  S4000  on  the  credit  side  of  your  account.  Enter  this  amount  in  the 
credit  or  right-hand  column  of  your  trial  balance.  The  following  illustrates  the  form  ;  the 
amount  is  different. 


iZ^  y(^,^^-t^Z^^^^€Z^^^'Z.'€L^  V^^^ 


r 


y-7-z^-ez^^?->-z.^^ 


J  <>  (?  ff 


Add  the  several  items  on  the  debit  side  of  your  Cash  account  and  write  the  sum  in  very 
small,  light  pencil  figures  directly  underneath  and  close  under  the  last  debit  item. 

Foot  the  credit  side  of  your  Cash  account  in  the  same  way,  writing  the  total  in  very 
small  pencil  figures  close  under  the  last  credit  item. 

The  following  illustrates  the  form  of  a  Cash  account  properly  footed  ;  the  amounts  and 
other  particulars  are  different  from  those  shown  in  your  Cash  account. 


A 


/ 

So  0  e> 

/ 

ZZ^ 

z 

y^ff 

z 

^z 

3 

/oT^ 

'  ■  ^  / 

, 

jf 


c 

7 


/ 

Z  £^  ^ 

z 

7^ 

z 

/  js6 

'ill 

Transfer  the  debit  footing  of  your  Cash  account  {$4617)  to  the  debit  cohinin  of  your 
trial  balance,  writing  the  amount  directly  opposite  the  word  Casli. 

Transfer  the  credit  footing  ($1388)  to  the  credit  column  of  your  trial  balance,  directly 
opposite  the  word  Cash.     The  following  illustrates  the  form  ;  the  amounts  are  different. 


TRIAL    liALANCK  —  JANUARY 


19 


^J^C^^^^-i^l^  y'.J^i^c^€Z'<^-Z---C^ie'!:^^ 


/ 


'f    - 


yyz-tZ'-'-->'Z-d^ 


4^/ 


7/ 


3  C?  O  0 

/  6j  / 


Foot  the  debit  and  credit  sides  of  your  Merchandise  account,  and  write  the  footings  in 
neat  pencil  figures,  as  in  the  Cash  account.  Transfer  the  footing  of  the  debit  side  to  the 
debit  column  of  your  trial  balance,  and  the  footing  of  the  credit  side  to  the  credit  column 
of  vour  trial  balance. 

Make  all  pencil  footings  in  the  ledger  with  a  sharp  pencil  and  as  small  as  possible,  so  that  tliev  will  a])pear 
neat  and  businesslike.  This  is  important  for  the  reason  that  such  footings  are  not  erased,  but  are  pLimitted  to 
stand  in  the  ledger  for  future  reference. 

Foot  the  debit  side  of  your  Expense  account,  and  transfer  the  footing  to  the  debit  side 
of  your  trial  balance.  There  is  nothing  on  the  credit  side  of  your  Kx])ense  account.  (For 
form  of  complete  trial  balance,  see  below.) 

Foot  the  debit  and  credit  columns  of  your  trial  balance;  the  two  footings  should  be 
equal.  If  the  footings  of  the  debit  and  credit  columns  of  your  trial  balance  are  not  equal, 
it  is  evident  that  an  error  has  been  made,  and  you  should  review  your  calculations,  or  both 
your  posting  and  your  calculations,  until  you  find  the  mistake.  If  the  error  is  in  a  pencil 
footing,  you  may  erase  it;  but  never  erase  anytliing  written  in  ink.  In  business  a  correction 
is  made  by  drawing  a  red-ink  line  through  the  erroneous  entry  and  writing  the  correct  one 
over  it.     But  in  this  preliminary  work  you  should  rewrite  the  whole  page. 

The  following  is  the  form  of  a  trial  balance  containing  the  same  number  of  items  as  in 
vour  trial  balance.     The  amounts  are  different. 


a-i^'^z^,  /,  /^   — 


2.     (O^^Z-/i.'€.^?'Z..<:L.^^ 


3  o  (7  o 
^  z  £>  I?  ^>"/  e^  ff 

<i  /  £>  ff               40  4^2] 
/  ^2.       \  


/  Z^'f^Z 


/  Z-A^^il 


20  ,    MODERN   ILLUSTRATIVE   KODRKFEnXG 

Exercise.  —  On  another  sheet  of  journal  i)a|)er  practice  the  rulings  indicated  below.  The  light  lines  stind 
for  the  blue  and  red  lines  already  on  your  paper;  tlie  heavy  lines  are  the  on^s  you  are  to  draw  in  red  ink.  The 
single  line  across  the  money  columns,  and  the  upper  line  of  the  double  rulings  at  the  left  and'across  the  money 
columns,  may  be  drawn  either  on  the  blue  line,  or  slightly  below  it.  Whichever  style  is  adopted  should  be 
followed  consistently.     (Read  page  4,  section  on  Ruling.) 


1— 

If  the  footings  of  your  tri;il  balance  arc  equal,  write  them  in  ink,  rule  the  trial  balance 
as  in  the  above  e.xercise  (see  last  form  on  paj^e  19),  and  present  it  with  your  journal  and 
ledger  to  your  teacher  for  approval.  Do  not  do  any  further  work  until  your  teacher 
certifies  to  the  correctness  of  what  you  have  already  done. 

QUESTIONS 

1.  Define  bookkeeping.     Define  double-entry  bookkeeping. 

2.  What  books  are  required  to  make  a  complete  record  of  any  business? 

3.  What  should  the  journal-daybook  contain? 

4.  Wliat  should  the  ledger  contain? 

5.  What  is  a  business  transaction? 

6.  Define  journalizing. 

7.  What  is  the  general  nile  for  journalizing? 

8.  Why  should  the  deliits  and  credits  of  every  journal  entry  be  equal? 
g.  What  does  the  term  ••  cash  "  include? 

10.  When  should  the  Cash  account  be  debited? 

11.  When  should  the  Cash  account  be  credited? 

12.  When  should  the  Expense  account  be  debited? 

13.  What  items  should  be  charged  to  the  Expense  account? 

14.  What  are  the  two  leading  points  to  be  borne  in  mind  in  writing  the  explanatory  record  in  your  journal 
entries?     Explain. 

15.  What  do  you  understand  by  the  term  "  merchandise  "  ? 

16.  When  should  the  Merchandise  account  be  debited? 

17.  When  should  the  Merchandise  account  be  credited? 

18.  Explain  and  illustrate  the  difference  between  Merchandise  .and  Expense. 

19.  Define  posting.     When  should  posting  be  done?  ^ 

20.  Upon  which  side  of  the  ledger  accounts  should  all  items  in  the  left-hand  inoney  column  of  the  journal 
appear  ?     L'pon  which  side,  all  those  in  the  right-hand  money  column  of  the  journal? 

21.  What  is  the  object  of  a  trial  balance? 

22.  How  often  should  a  trial  balance  be  taken? 

23.  What  names  should  appear  in  a  trial  balance? 

24.  Why  should  the  debit  and  credit  columns  of  a  trial  balance  show  equal  footinu;s? 

25.  Does  a  trial  balance  prove  your  work  to  be  absolutely  correct? 

26.  Ex|)lain  the  pencil  footings  in  the  ledger. 

27.  Is  it  possible  to  have  mistakes  in  the  work  and  yet  have  the  trial  balance  in  balance?     Explain  in  detail. 


FLOUR   AND    GRAIN   BUSINESS  — FEBRUARY 

Make  the  journal-daybook  entries  required  for  the  following  transactions,  either  on  jour- 
nal paper  or  in  Blank  No.  i,  as  your  teacher  directs. 

No.  1.  —  February  i,  19 — .  I  (your  name)  engage  in  the  Flour  and  Grain  business, 
investing  cash,  ^2500. 

Instructions. — Write  February  i  a.nd  the  current  year  at  the  top  of  page  i  in  your 
journal-daybook  (see  model,  page  6).  Determine  the  debit  by  rule  i,  page  11  ;  determine 
the  credit  by  rule  2,  page  1 1.     For  form  of  entry  similar  to  this   see  page  10. 

No.  2.  —  February  2.     Paid  Henry  Jones  rent  of  store  for  two  months,  in  cash,  $50. 

Instructions.  —  Determine  the  debit  by  rule  3,  page  1 1  ;  determine  the  credit  by  rule  4, 
page  II.     For  form  of  entry  similar  to  this,  see  page  11. 

No.  3.  —  February  3.  Bought  of  R.  C.  Thompson,  for  cash,  200  brls.  flour  at  $4  per 
brl. ;  total,  S  Soo. 

Instructions.  —  Determine  the  debit  by  rule  5,  page  12  ;  determine  the  credit  by  rule  4, 
page  II.     For  form  of  entry  similar  to  this,  see  page  12. 

No.  4. — -February  5.  Sold  A.  H.  Warren,  for  cash,  50  brls.  flour  at  S4.5oper  brl., 
total,  $225. 

Instructions.  —  Determine  the  debit  by  rule  i,  page  1 1  ;  determine  the  credit  by  rule  6, 
page  12.     For  form  of  entry  similar  to  this,  see  page  13. 

No.  5.  — February  6.  Bought  from  Winter  Bros.,  for  cash,  600  bu.  of  corn  at  35  ^  per 
bu. ;  total,  $210.     (Entry  similar  to  that  for  transaction  No.  3.) 

No.  6.  — February  7.  Sold  Wm.  Archer  &  Co.,  for  cash,  50  brls.  flour  at  $4.50  per 
brl.,  200  bu.  corn  at  ,\o'^  per  bu.  ;  total   $305.     (Entry  similar  to  that  for  transaction  No.  4.) 

No.  7.  —  February  8.  Bought  of  Arthur  McMillan,  for  cash,  100  brls.  flour  at  $3.90 
per  brl.,  1200  bu.  oats  at  33  ^  per  bu.;  total,  $786.  (Entry  similar  to  those  for  transactions 
Nos.  3  and  5.) 

No.  8. — -February  9.  Paid  cash  for  clerk  hire,  $15,  for  insurance,  $10;  total,  $25. 
(Determine  the  debit  by  rule  3,  page  11.) 

No.  9.  —  February  id.  Sold  E.  H.  French  &  Co.,  for  cash,  25  brls.  flour  at  $4.50  per 
brl.,  300  bu.  oats  at  38^  per  bu.,  200  bu.  corn  at  40)^  per  bu.  ;  total,  S306.50. 

No.  10. — February  12.  Bought  of  John  C.  Cornell,  for  cash,  200  bu.  rye  at  55^  per 
bu. ;  total,  $110. 

No.  11.  —  Open  the  following  accounts  in  your  ledger,  at  the  places  indicated.  (Student's 
name),  top  of  the  third  page  in  the  blank  (first  two  pages  are  for  inde.x);  number  this 
page  I,  and  number  the  following  pages  in  order.  Merchandise,  nth  line,  page  i  (rule  as 
directed  in  Exs.  2  and  3,  page  5).     Expense,  top  of  page  2.     Cash,  top  of  page  3. 

No.  12.  —  Post  the  transactions  from  your  journal-daybook  to  your  ledger.  Forexplana:- 
tion  of  posting,  see  pages  13-17. 

21 


•2-2  MODERN   ILLUSTK.MIVK   liOOKKEEPING 

No  13.  —  Take  a  trial  balance  from  your  ledger.  See  form  and  explanation  on  pages 
17-20. 

No.  14.  —  Submit  your  journal-daybook,  ledger,  and  trial  balance  to  your  teacher  for  in- 
spection and  approval. 

After  the  trial  balance  has  been  approved,  copy  it  in  HIank  No.  i,  a  portion  of  which  is 
set  apart  for  a  trial  balance  book  as  indicated  by  the  inde.x  on  the  front  cover. 

Special  Rtilf'>t  for  Personal  Accounts 

Unit' 7-  —  Debit  persons  tvhen  they  be-  Rule  S.  —  Credit  persons  when  the  busi- 

comc  indebted  to  the  business  or  when  the        ness  becomes  indebted  to  them  or  tuhen  they 
business  pays  them  on  account.  pay  the  business  on  account. 

No.  15.  —  February  14.  Bought  of  A.  J.  Lane,  on  account,  30  days,  250  bu.  oats  at 
33  ^  per  bu. ;  total,  $  82.50.  ^ 

Instkuctions.  — When  you  buy  goods  from  a  person  without  paying  for  them  at  the  time 
of  the  purchase,  the  goods  are  said  to  be  bought  on  account,  that  is,  on  time  or  on  credit,  and 
the  Person  from  whom  you  buy  should  be  credited,  because  the  business  becomes  indebted 
to  him  for  the  amount  of  the  ])urchase. 

In  this  instance  you  have  bought  goods  for  the  purpose  of  selling,  hence  Merchandise 
should  be  debited  for  the  cost  of  the  goods.  Tlie  purchase  was  made  from  .\.  f.  Lane  on 
your  promise  or  implied  |)romise  to  pay  for  the  goods  in  30  days,  hence  A.  J.  Lane  should  be 
credited  because  you  have  become  indebted  to  him  on  account. 

The  following  illustrates  the  form  of  the  entry. 


X%zi^^a-, 


-*< 


7' 


Rule  !).  —  When  yon  purchase  goods  zvithout  paying  for  them  at  the  time  of  the  purchase 
credit  the  Person  from  whotn  the  goods  are  bought,  because  the  business  has  become  indebted 
to  him  071  account. 

No.  16.  —  Fehruakv  15.  Bought  of  W.  11.  Stevens,  on  account,  600  bu.  oats  at  33/  per 
bu. ;  total,  $198. 

Instruction.s. — This  transaction  is  similar  to  the  precetling  one.  Debit  Merchandise 
(sec  rule  5);  credit  \V.  H.  Stevens  (see  rule  9). 

No.  17.  —  Fkbkuarv  15.  Bought  of  F.  A.  Smith  &  Co.  on  account,  10  days,  300  bu.  rye 
at  55  ^'  per  bu. ;   total,  S  165. 

No.  18.  —  February  16.  .Sold  W.  A.  .Scott  on  account,  10  days,  200  bu.  oats  at  36  >^  per 
bu.  ;  total,  $  72. 

Instructio.ns.  —  When  you  sell  merchandi.se  without  receiving  payment  for  it  at  the 
time  of  sale,  the  goods  are  said  to  be  sold  on  account,  that  is,  on  time  or  on  credit,  and  the 
person  to  whom  the  goods  are  sold  should  he  ticbited.      In  this  instance  W.  A.  Scott  has 


JOURNALIZING  —  l-KBRfAKY 


23 


purchased  from  you  $72  worth  of  nierchandise  without  payiiii;  for  it;  you  simply  ha\e  his 
promise  or  implied  promise  to  pay.  Therefore  IV.  A.  Scott  has  become  indebted  to  the 
business  and  should  be  debited.  Credit  Merchandise  because  merchandise  produces  value 
for  the  business. 


The  following  illustrates  the  form  of  your  entr 


ry. 


^^Wi 


/^i> 


A^^£> 


Rule  10.  —  IV/ien  yon  sell  gooifs  ivithout  receiving  f^njment  tJierefor  at  tJic  time  of  the  sale, 
debit  the  Person  to  whom  the  goods  are  sold,  because  he  has  become  indebted  to  the  bnsiness 
on  account. 

No.  19.  —  Februarv  17.  Sold  S.  A.  Dodge  &  Co.  on  account,  60  days,  50  bris.  flour  at 
$4.75  per  brl.  ;  total,  ^237.50. 

Instructions.  —  This  transaction  is  similar  to  the  preceding  one.  Debit  5.  A.  Dodge 
&  Co.  (see  rule  10);  credit  Merchandise. 

No.  20. — February  17.  Sold  J.  S.  Sumner,  on  account,  500  bu.  rye  at  60^  per  bu., 
500  bu.  oats  at  36^  per  bu.,  600  bu.  corn  at  40^  per  bu. ;  total,  $720.  (Determine  the  debit 
by  rule  10;  determine  the  credit  by  rule  6.) 

No.  21. — February  19.  Sold  E.  H.  French  &  Co.  on  account,  todays,  50  brls.  flour 
at  $4.60  per  brl.,  200  bu.  oats  at  36^  per  bu.,  100  bu.  of  corn  at  40^  per  bu. ;  total,  $342. 

No.  22.  —  February  20.  Sold  E.  R.  Adams,  for  cash,  400  bu.  oats  at  38^  per  bu. ; 
total,  $152.     (Determine  the  debit  by  rule  i  ;  determine  the  credit  by  rule  6.) 

No.  23. — February  23.  Bought  of  Rice,  Miller  &  Co.  on  account,  30  days,  250  bu. 
rye  at  57^  per  bu.,  600  bu.  corn  at  35^  per  bu.  •,  total,  $352.50.  (Entry  similar  to  that  for 
transaction  No.  15.) 

No.  24.  —  February  24.  Sold  Roberts  Bros.,  for  cash,  200  bu.  r)'e  at  60-'  per  bu.  ; 
total,  $120. 

No.  25.  —  February  26.  W.  A.  Scott  has  paid  you  $72  cash  in  full  settlement  of  his 
account. 

Instructions.  —  In  transaction  No.  18  W.  A.  Scott  became  indebted  to  you  to  the  extent 
of  $72.  He  now  pays  you  this  amount  in  cash  on  account,  that  is,  in  settlement  of  what  he 
owed  you ;  therefore,  credit  IV.  A.  Scott.  Cash  comes  into  the  business,  hence  Cash  should 
be  debited. 

The  following  illustrates  the  form  of  your  entry. 


z6 


cZ'OC'^^T-.^       -;<r^ 


<4J-ff 


24 


MODKRX   ILLUSTRATIVE   liOOKKliEPlXG 


liiile  11.  —  IV/icn  a  person  pays  you  on  account,  credit  that  Person. 

No.  26.  — Februarv  26.  —  Received  cash  of  J-  S.  Sumner,  S  100,  to  apply  on  account. 

Instructions.  —  This  transaction  is  similar  to  the  preceding  one,  with  the  exception  that 
the  explanation  should  read  On  account  ms\.C7)A  of  In  full  of  account. 

No.  27.  —  February  27.    Paid  A.  J.  Lane  cash,  S82.50,  in  settlement  of  his  account  to  date. 

Instructions.  — In  transaction  No.  15  you  became  indebted  to  A.  J.  Lane  to  the  amount 
of  S82.50.  You  now  pay  him  cash  on  account,  that  is,  in  settlement  of  the  debt  you  owe 
him  ;  hence  A.  J.  Lane  should  be  debited.  Cash  goes  out  of  the  business  ;  therefore,  credit 
Casli. 

The  following  illustrates  the  form  of  your  entry. 


^7 


'Z^ 


■■^^i-C-C^  ^ ^Z'C'C.'/^^ 


7' 


/' 


Bute  12.  —  When  yon  pay  a  person  on  account,  debit  that  PERSON. 

No.  28.  —  I'ebruakv  28.     Paid  W.  H.  Stevens  cash,  S  100,  to  apply  on  account. 

Instructions. —  Make  entry  similar  to  that  for  the  preceding  transaction,  except  that 
the  c.Nplanation  should  read  On  account  instead  of  In  full  of  account. 

No.  29. —  February  28.  Received  cash  of  E.  H.  French  &  Co.,  S342,  in  payment  of 
bill  of  igih  inst.     (Entry  similar  to  that  for  transaction  No.  25.) 

No.  30.  —  February  28.  Sold  Emerson  &  Sons,  on  account,  100  bu.  corn  at  40^  per 
bu.,  60  brls.  flour  at  S4.50  per  brl.,  100  bu.  oats  at  35^  per  bu. ;  total,  $345-  (Determine 
the  debit  by  rule  10;  determine  the  credit  by  rule  6.) 

No.  3L  —  February  28.  Paid  cash  for  postage  and  advertising,  S12.  (Determine  the 
debit  by  rule  3  ;  determine  the  credit  by  rule  4.) 

No.  32.  —  Open  the  following  new  accounts  in  your  ledger,  leaving  space  as  indicated. 

IV.  A.  Scott,  nth  line,  page  4.  5.  A.  Dodge  &■  Co.,  22d  line,  page  4.  J.  S.  Sumner, 
33d  line,  page  4.  E.  H.  French  &  Co.,  top  of  page  5.  Emerson  &  Sons,  nth  line,  page  5. 
A.  J.  Lane,  iith  line,  page  7.  W.  II.  Stevens,  22d  line,  page  7.  E.  A.  Smith  ^  Co.,  33d 
line,  page  7.     Rice,  Miller  &■  Co.,  top  of  page  8. 

Rule  a  double  line  under  headings  as  heretofore  instructed.  Select  addresses  for  these 
persons  and  com]xanies  from  vour  own  section  of  the  country,  and  write  them  in  the  ledger 
as  shown  on  page  9. 

No.  33.  —  Post  the  entries  from  your  journal-daybook  to  your  ledger,  according  to  in- 
structions given  on  pages  13-17.  Do  not  open  new  accounts  in  your  ledger  with  Cash, 
Merchandise,  and  Expense,  but  post^ihe  items  under  the  old  accounts,  as  this  is  simply  a 
continuation  of  vour  business. 

The  following  illustrates  the  form  of  a  Merchandise  account,  showing  how  it  should 
appear  in  the  ledger  with  the  pencil  footings  for  the  first  trial  balance.  (This  is  not  your 
Merchandise  account. ) 


HOW  TO  CHKfK  FROM  JOURNAL  TO  LEDGER  — FEBRUARY 


25 


Ji 


2 

f 


'f  - 


/ 

y  i 


Z73 

2  r/M  o 


HOW   TO    CHECK    FROM    JOURNAL    TO    LEDGER 

In  order  to  detect  mistakes  in  posting,  many  bookkeepers  check  every  item  from  the 
journal  to  the  ledger  after  it  has  been  posted.  As  you  have  completed  the  posting  for  the 
month  of  February,  you  may  check  your  entire  journal  to  your  ledger.  Use  a  hard,  sharp- 
pointed  pen:il.  On  page  i  of  your  journal  you  find  the  item  Casli,  Dr.,  $2^00.  Turn  to 
the  Cash  account  in  your  ledger  and  place  a  light  pencil  dot,  as  illustrated  in  the  following 
form,  on  the  vertical  double  line  to  the  left  of  the  amount  2500,  which  should  be  the  first 
item  on  the  debit  side  of  this  account. 

J 


J. 


f  - 


yS  -..rtp  6 


Now  return  to  the  journal  and  place  a  dot  to  the  left  of  the  debit  amount,  2500,  as 
illustrated  by  the  first  dot  in  the  form  below. 

You  have  now  "checked"  the  first  debit  item.     Check  each  debit  item  in  a  similar  manner. 

Always  find  the  correct  amount  in  the  ledger  and  check  it  there  before  checking  it  in 
the  journal.  Carefully  inspect  each  amount  to  see  that  it  has  been  written  correctly,  as  errors 
are  often  made  by  transposing  or  misplacing  figures,  thus  :  $125  for  $152;  1^1.50  for  $150. 

After  checking  all  debits,  turn  to  the  beginning  of  your  journal  and  check  all  the  credit 
items.     Note  the  location  of  the  dot  for  the  first  credit  item  in  the  illustration  below. 


>2^<^-£--?^.-,i<^<^  .^^-'^-Z-' 


^-«>«Z<^<C^ 


^.SO  o 


26 


MODERN   ILLUSTRATIVE   liOOKKEEPING 


If  any  posting  has  been  omitted,  or  if  an  item  has  been  posted  to  the  wrong  side,  it  will 
be  observed  in  the  checking.  If  an  amount  has  been  posted  twice,  it  will  appear  once  in 
the  ledger  unchecked,  and  thus  the  error  will  be  detected. 

Exercise.  —  On  a  sheet  of  ledger  paper  practice  ruling  double  lines  as  illustrated  below  l)y  the  heavy  lines. 
These  are  to  extend  across  all  columns  except  the  wide  space  on  each  side,  and  are  to  begin  and  end  exactly  at 
the  proper  vertical  line.     Compare  with  the  exercise  on  page  20. 


No.  34.  —  Rule  off  all  your  ledger  accounts  that  balance,  with  ruling  like  that  in  the 
above  exercise ;  for  illustration,  see  account  of  J.  Grant  &  Co.,  on  page  9.  The  accounts  in 
your  ledger  to  be  ruled  off  arc  those  of  W.  A.  Scott,  E.  H.  French  &  Co.,  and  A.  J.  Lane. 

Now  foot  your  ledger  in  light  pencil  figures  as  shown  on  page  iS,  and  then  take  off  a 
trial  balance  as  explained  on  pages  17-20.  The  accounts  which  you  have  ruled  off  are  to 
be  omitted  from  the  trial  balance ;  as  the  debits  and  credits  of  these  accounts  are  equal, 
their  onii.ssion  will  not  affect  the  equality  of  the  debits  and  credits  as  a  whole. 

No.  35. — Submit  your  journal-daybook,  ledger,  and  trial  balance  to  your  teacher  for 
approval.  After  the  trial  balance  has  been  approved,  copy  it  in  Blank  No.  i  on  the  same 
page  with  the  previous  trial  balance.  Write  the  heading  on  the  second  blank  line  below  the 
footings  of  the  trial  balance  of  Feb.  12,  and  draw  a  double  red  line  under  it  as  under  a  ledger 
heading.     (See  E.xercise  2  on  page  5.) 


MARCH;  CONTINUATION    OF    FEBRUARY   BUSINESS 

No.  36.  —  M.VKCii  I.  Bought  of  II.  S.  Clough  &  Co.  on  account,  10  days,  200  brls. 
flour  at  S4.05  per  brl.,  1000  bii.  oats  at  30^  per  bu. ;  total,  Siiio.  (Entry  similar  to  that 
for  transaction  No.  15,  page  22  ;  write  it  at  the  top  of  the  first  blank  page  in  Blank  No.  I. 
in  same  style  as  the  entry  illustrated  on  page  10.) 

No.  37.  —  M.\RCH  2.  Sold  \Vm.  Archer  &  Co.,  on  account,  500  bu.  oats  at  38^  per  bu., 
50  bu.  rye  at  60^  per  bu. ;  total,  $220.     (Entry  similar  to  that  for  No.  18,  page  22.) 

No.  38.  —  M.\Kcii  3.  Paid  Rice,  Miller  &  Co.  cash,  $352.50,  in  payment  c^  invoice  of 
I'"cbruary  23d.     (luitry  similar  to  that  for  transaction  No.  27,  page  24.) 

No.  39.  —  March  3.  Received  cash  of  Emerson  &  Sons,  to  apply  on  account,  S250. 
(Entry  similar  to  that  for  transaction  No.  26,  page  24.) 

No.  40.  —  March  5.  Paid  H.  S.  Clough  &  Co.  cash,  on  account,  $500.  (Determine 
the  debit  by  rule  12,  page  24;  determine  the  credit  by  rule  4,  page  1 1.) 

No.  41.  —  March  6.  Bought  of  Kidder  &  Hill  on  accoimt,  60  days,  1000  bu.  corn  at 
34^  l)er  bu.  ;  total,  $xx,x. 

No.  42. —  March  7.     Paid  cash  for  freight  and  drayage  of  flour  and  grain  to  date,  Si 5. 

Instructions.  —  Cash  paid  for  freight,  cartage,  drayage,  etc.,  of  your  merchandise  is  a 
part  of  the  cost  of  your  merchandise,  hence  Merchandise  should  be  debited.  The  following 
illustrates  the  form  of  your  entry,  tiiough  the  amount  is  different. 


JOURXALIZIXG  —  MARCH 


n  y 


/" 


£jzik-«;Z--z<>«^-^-.i-<----«S^,tfzii«.Z^i^ 


X2.^rff 


^2  ^O 


Hule  13.  —  Debit  Merchandise  for  al!  aiiiomits  paid  for  fright,  c.r/>n-ss;  cartage, 
drayagc,  etc.,  on  mcrclumdise. 

No.  43.  —  March  8.  Sold  E.  H.  French  &  Co.  on  account,  lo  days,  300  bu.  corn  at  40^ 
per  bu.,  400  bu.  oats  at  38^  per  bu. ;  total,  ^xxx. 

No.  44.  —  Makch  9.     You  have  withdrawn  from  the  business,  for  private  use,  cash,  $2^^. 

Instructions.  —  As  the  Proprietor  is  credited  with  money,  property,  etc.,  which  he  in- 
vests in  the  business,  it  is  evident  that  he  should  be  debited  for  anything  which  he  takes  out 
of  the  business  for  his  own  use.  In  this  instance  he  has  withdrawn  cash,  hence  the  Pro- 
prietor should  be  debited  for  $23.     The  following  illustrates  the  form  of  your  entry. 


■z-d^t^ 


^~&  O-^.d'^ 


^0 


oT^ 


Rule  1  J:. — Debit  the  Proprietor  for  ail  cash,  merchandise,  etc.,  which  he  takes  out  of 
the  business  for  his  private  use. 

No.  45.  —  March  10.  Bought  of  Kidder  &  Hill  on  account,  30  days,  1000  bu.  corn  at 
36^  per  bu.,  200  bu.  rye  at  54)^  per  bu. ;  total,  ^.xxx. 

No.  46.  —  March  12.     Paid  H.  S.  Clough  &  Co.  cash,  $  100,  to  apply  on  account. 

No.  47.  —  March  12.  Sold  F.  W.  Garland,  of  Rochester,  N.Y.,  on  his  note  at  10  days, 
50  brls.  flour  at  $4.60  per  brl. 

The  following  illustrates  the  form  of  the  note  which  F.  W.  Garland  gives  you,  the 
amount  and  time  being  different.  F.  W.  Garland  is  the  "  maker  "  of  this  note ;  the  student 
is  the  "  payee." 


2-.J'a> 


^^wZa/^^.a:^    ^^^. 


■^^-^J.9o_ 


_!^^^^.^£.,yt,^^_^!3^^^:,;2^L^ 


-y. 


^jl^^t/y€s^a^^C^.jL,^.e'?mJ^i/i:^ia'i^ 


y^^.^-'^r-'-^^^..r^.-».^^ 


te^yC 


_£:2Z2s% 


Z-y 


28 


MODERN'   ILLUSTRATIVE    BOOKKEEPIXG 


IxsTKCCTiONS.  —  Vou  havc  sold  merchandise,  and  F.  W.  Garland  has  given  you  his  written 
promise  to  pay  in  30  days  the  amount  of  the  bill.  This  kind  of  written  promise  to  pay  is 
called  a  promissory  note.  When  such  notes,  or  promises,  are  in  favor  of  the  business,  they 
are  called  "  Hills  Receivable,"  and,  like  any  other  property,  their  account  is  debited  when 
they  are  received  and  credited  when  they  are  disposed  of;  hence  in  this  instance  Bills 
Receivable  should  be  debited.     The  following  illustrates  the  form  of  your  entry. 


/2. 


_   sz. 


z^        ^r^ 


j 

i 

1               1 

i 

liule  l'>.  —  Debit  L'/LCS  RECEIVABLE  zulieii  another's  xvrittcu  promise  comes  into  the 
business. 

No.  48.  —  March  13.  Sold  Wm.  Archer  &  Co.,  on  their  note  at  15  days,  150  brls.  flour 
at  S4.60  per  bri.     (Entry  similar  to  that  for  preceding  transaction.) 

No.  49.  —  M.\KCH  14.  S.  A.  Dodge  &  Co.,  who  owe  you  S  237.50,  have  requested  you  to 
accept  their  note  at  30  days  in  payment  of  the  account.     This  you  have  done. 

Instructions.  —  In  this  instance  you  havc  received  S.  A.  Dodge  &  Co.'s  written  promise 
to  pay,  hence  Bills  Receivable  should  be  debited  (see  rule  15).  As  S.  A.  Dodge  &  Co.  havc 
paid  you  on  account,  S.  A.  Dodge  &  Co.  should  be  credited.  The  following  illustrates  the 
form  of  your  entry. 


^/2j,'.^-^^ 


-^C-C-!i-'C--ej       -  -#?-£-./ 


/ 


3^yS- 


'Z^ 


No.  50.  —  March  15.     J.  S.  Sumner  sends  you  his  note  at  10  days,  dated  March   14,  to 
apply  on  account  S250.     (Entry  similar  to  that  for  preceding  transaction.) 

No.  51.  —  March  16.     Sold  S.  A.  Dodge  &  Co.,  on  account,  600  bu.  corn  at  40^  per  bu., 
50  brls.  flour  at  S4.S0  per  brl. 

No.  52.  —  March  17.     Bought  of  M.  S.   Clough  &  Co.,  on  account,    100  brls.   flour  at 
S4  ])er  brl.,  500  bu.  corn  at  35^  per  Ini. 

No.  53.  —  March  19.     Sold  J.  B.  Fulton,  on  his  note  at  two  months,  400  bu.  oats  at  38^ 
per  bu.,  200  bu.  corn  at  40^  per  bu. 

No.  54.  —  M.\rch  19.     Bought  of  Kidder  &  Hill,  on  your  note  at  10  days,  200  brls.  flour 
at  S4  per  brl.,  500  bu.  corn  at  35;^  per  bu. 


JOURNALIZING  — MARCH  20 

The  following  is  the  form  of  the  note  which  you  will  give  Kidder  &  Hill.     The  amount, 
and  jMobably  the  address,  will  be  different. 


r 


:^rA.-Arjt.VTrit;gr3afa7^f>rAra^^^grTiiLfargrj^raM[g*fjjJBJAgAa.-B;^-y 


*5*' 


rp^^W/T^     0L/^k^^,Ml^^ 


'Z^^^/o'     J.O 


'-^f^v-^>- 


r/^^^/^ 


% 


.<^^=^,^J^yfe_L-£^ 


^/fy^'>y^/^^-^'tC!::rU::rC^^     >'^?^.^>-^ 


JZi;-1^^^.-.^^^.^K7,^^^^ 


7/ 


/W\   <?22,£^ 


C/?y  -z^^,<:>-^^^^  \ 


%?M4J 


\m^. 


-      -C^^^,-^^.^^^-vd^ 


.^y7,-<?g^<?-?^,^^ 


^^yE^^w^w^»^ttw^J^^T^>e.^,a^B^^M^^a^m1c^«^^^H^»VBl'^w»^»^»^^»^w^m^g'T»^^>!^Mllw^l^Bp^iT■^L^^Bl^B^^mv,^^y.:^ 


Instructions.  —  You  have  bought  merchandise  and  have  given  Kidder  &  Hill  your 
note  or  written  promise  to  pay  the  amount  of  the  bill  in  10  days.  Written  promises  to  pay, 
given  by  you  for  the  benefit  of  the  business,  are  called  "  Bills  Payable,"  and,  like  any  other 
property,  their  account  should  be  credited  when  they  are  issued  or  disposed  of.  Hence 
Bills  Payable  should  be  credited  for  the  amount  of  the  note.  The  following  illustrates  the 
form  of  your  entry. 


■?t2^^/6l. 


'9 


£ 


O  (P 


1^<?  <? 


Rule  16.  —  Credit  Bills  Payable  zvhcn  the  business  issues,  or  gives  out,  its  ozcn  zvritten 
promise  to  fay. 

No.  55.  —  March  20.     Bought  of  Warner  &  Freeman,  on  your  note  at  10  days,  600  bu. 
corn  at  35^  per  bu.     (Entry  similar  to  that  for  preceding  transaction.) 

No.  56.  —  March  21.     Sold  A.   H.   Warren,  on  his  note  at  30  days,   50  brls.  flour  at 
$4.60  per  brl.,  190  bu.  corn  at  40^  per  bu. 

No.  57.  —  March  22.     Sold  Weston  &  Hill,  on  account,  25  brls.  flour  at  $4.60  per  brl., 
380  bu.  corn  at  40^  per  bu. 

No.  58.  —  March  23.     Bought  of  Chas.  A.  Hill  &  Co.,  on  your  note  at  60  days,  lOOO 
bu.  oats  at  33^  per  bu.,  500  bu.  corn  at  35^  per  bu. 

No.  59.  —  March  23.     Sold   Roberts  Bros,  on  account,   15  days,  50  brls.  flour  at  S4.50 
per  brl. 


30 


MODERN    ILLUSTRATIVE   BOOKKEEPING 


No.  60.  —  March  23.     F.  VV.  Garland  has  paid  his  note  of  12th  inst.  in  cash,  $230. 

Instructions.  —  \'ou  have  received  cash  and  disposed  of  the  note,  which  should  be 
returned  to  F.  VV.  Garland.  As  Bills  Receivable  was  debited  when  the  note  was  received, 
it  is  evident  that  Bills  Receivable  should  be  credited  when  the  note  is  disposed  of.  The 
following  illustrates  the  form  of  your  entry. 


'-^^vr 


-P^^^-^^^^^^^J 


-t^^^T^. 


■^    -jA 


^y^^z-H'-d^yy- 


^^c 


l^^t. 


Rule  17.  —  Credit  Bills  Recei  i  ■.iul/-.  w/icii  tltc  business  disposes  of,  or  gives  out,  another's 
written  prouiisc. 

No.  61.  —  March  24.  J.  S.  Sumner  has  paid  his  note,  due  this  day,  in  cash,  $250. 
(Entry  similar  to  that  for  preceding  transaction.) 

No.  62.  —  March  24.  You  have  paid  your  note  of  19th  inst.,  favor  of  Kidder  &  Hill,  in 
cash,  $975- 

Instructions.  —  Vou  have  disposed  of  cash  and  received  for  it  your  note.  As  Bills 
Payable  was  credited  when  your  note  was  issued,  it  is  evident  that  Bills  Payable  should 
be  debited  when  your  note  is  paid  or  redeemed.  The  following  illustrates  the  form  of 
your  entry. 

X  "      I 


4,t^ 


Rule  18,  —  Debit  Bills  Payable  luhcn  the  business  redeems,  or  pays,  its  own  written 
promise. 

>        No.  63.  —  March  24.     You  have  paid  your  note,  favor  of  Warner  &  Freeman,  in  cash, 
$210.     (Entry  similar  to  that  for  preceding  transaction.) 

No.  64.  — March  26.  Received  of  K.  11.  I-rench  &  Co.,  to  apply  on  account,  their 
note  at  30  days  for  S  200. 

No.  65.  —  March  26.  Transfer,  by  indorsement,  A.  H.  Warren's  note  of  the  21st  inst. 
for  S306  to  H.  S.  Clough  &  Co.,  to  apply  on  account. 

Instructions.  —  Instead  of  keeping  A  II.  Warren's  note  (bills  receivable)  until  it 
becomes  due,  and  collecting  the  money  yourself,  you  have  given  the  note  to  II.  S.  Clough 
&  Co.  to  apply  on  account,  and  they  agree  to  accept  it  at  its  face  value.  You  have  paid 
Clough  &  Co.  on  account,  therefore  they  should  be  debited  ;  you  have  disposed  of  another's 
written  promise,  hence  Bills  Receivable  should  be  credited.  The  following  illustrates  the 
form  of  entry. 


JOURNALIZING—  MARCH 


31 


2-r 


a^^^i-c^ 


J(?i? 


^S^-f^E^  /X--01 


Indorsing  a  note  consists  in  writing  a  signature,  with  or  without  other  words,  on  the 
back  of  the  note.  The  left-hand  end  of  the  note  should  be  turned  away  from  you  as  you 
turn  the  note  reverse  side  up,  and  the  signature  should 
then  be  written  about  one  and  one-half  inches  from 
the  ujiper  end.  The  effect  of  an  indorsement  is  to 
make  the  person  who  writes  his  name  on  the  back  of 
a  note  responsible  for  its  payment  in  case  the  maker 
fails  to  pay  the  note  when  it  is  due.  The  indorsement 
of  the  payee  is  necessary  also  for  the  purpose  of  trans- 
ferring the  ownership  of  the  note  to  another  person. 

Here  is  a  form  of  indorsement  commonly  used  in 
transferring  notes  like  that  referred  to  in  transaction 
No.  65. 

No.  66.  —  March  26.      Paid  cash  for  clerk  hire,  $  15,  for  stamps,  etc.,  $2. 

No.  67.  —  March  27.  Gave  Kidder  &  Hill  your  note  at  30  days,  for  $340,  to  apply  on 
account. 

No.  68.  —  March  27.  William  Archer  &  Co.  paid  their  note  of  the  13th  inst.  in  cash, 
$690. 

No.  69.  —  March  28.  The  freight  and  drayage  bills  to  date  are  $12;  they  have  been, 
paid  in  cash. 

No.  70.  —  March  28.  You  have  taken  from  the  store,  for  personal  use,  2  brls.  flour  at 
$4  per  brl. 

INSTRUCTION'S.  —  You  (the  proprietor)  have  taken  from  the  business,  for  your  own  pri- 
vate use,  merchandise  valued  at  $8.  The  Proprietor  should  be  debited  for  the  withdrawal 
from  the  business,  and  Merchandise  should  be  credited,  as  it  has  been  sold  to  the  proprietor. 

No.  71.  —  March  29.  Bought  of  A.  J.  Lane,  on  account,  600  bu.  oats  at  32^  per  bu., 
200  bu.  rye  at  55;^  per  bu. 

No.  72.  — ■  March  29.      Paid  F.  A.  Smith  &  Co.  cash,  $  165,  in  full  of  account  to  date. 

No.  73.  — March  29.      Received  of  W'm.  Archer  &  Co.  cash,  on  account,  $  150. 

No.  74.  —  March  30.  Bought  of  Rice,  Miller  &  Co.  on  account,  30  days,  50  brls.  flour 
at  $395  per  brl.,  400  bu.  corn  at  35^  per  bu. 

No.  75.  — March  30.  Sold  W.  A.  Scott  on  account,  30  days,  400  bu.  oats  at  38?^  per 
bu.,  50  brls.  flour  at  $4.50  per  brl. 

No.  76.  —  March  31.  Bought  of  F.  A.  Smith  &  Co.  on  account,  30  days,  75  brls.  flour 
at  S  4  per  brl. 


32 


MODERN   ILLLSTRATIVK   BOOKKEEPING 


No.  77/ — Open  the  following  accounts,  at  the  places  indicated. 

Loss  mid  Gain,  I2th  line,  page  2.  Bills  Receivable,  top  of  page  4.  Wm.  Archer  &  Co., 
22d  line,  page  5.  \\\s!oii  Cr  Hill,  33d  line,  page  5.  Roberts  Bros.,  top  of  page  6.  Bills 
buyable,  top  of  page  7.  //.  J>.  Clongli  &  Co.,  nth  line,  page  8.  Kidder  &  Hill,  22d  line, 
page  8. 

Select  addresses  for  the  personal  accounts  and  insert  them  on  the  ledger  as  directed  at 
the  end  of  February,  page  24. 

No.  78.  —  Post  from  xour  journal,  following  directions  for  posting  on  pages  13-17.  Rule 
off  all  accounts  which  are  in  balance,  or  a  portion  of  which  balances,  as  directed  on  page  26. 

No.  79.  —  In  the  trial  balance  for  March  31st,  you  may  write,  in  the  proper  money  col- 
umn, only  one  amount  for  each  account  —  namely,  the  difference  between  the  two  sides  of 
that  account  in  the  ledger.  Pencil  foot  your  ledger  accounts  as  usual,  using  a  hard,  sharp- 
pointed  pencil.  On  the  larger  side  of  the  ledger  account,  in  the  explanation  space,  near  the 
top  of  the  account,  write  in  small  pencil  figures  the  footing  of  that  side  of  the  account; 
underneath  it  write  the  footing  of  the  smaller  side ;  subtract,  writing  the  remainder  under- 
neath, and  leave  these  pencil  figures  in  your  ledger.  Carry  this  remainder  only  into  the 
trial  balance  opposite  the  name  of  the  account,  and  place  it  on  the  larger  side.  (See  Cash 
and  Merchandise  accounts  in  model  ledger,  page  8,  for  the  method  of  finding  the  difference 
between  the  two  sides  of  an  account.) 

The  following  is  a  trial  balance  taken  in  this  manner  from  the  model  ledger  on  pages 
S  and  9. 


f^z^^n-C'^:^ 


.J^ 


/ 


-    y 


JL 


'-fsj-^ 


^  (^  X  . 


VffA^^ 


<rx  ff 


^  7or 


!^ 


■i^i^-^^^ 


HOW    TO    FIND    ERRORS    IN    TRIAL   BALANCES 

Although  the  bookkeeper  should  perform  his  work  so  carefully  as  to  avoid  all  errors,  it 
is  not  unusual  fur  errors  to  occur  which  will  cause  a  difference  between  the  footings  of  the 


STATEMENTS   OF   RESULTS— MARCH  33 

two  sides  of  the  trial  balance.  These  errors  would  probably  be  located  by  checking  the 
posting  as  explained  on  page  25,  but  many  bookkeepers  prefer  to  make  use  of  every  other 
means  for  locating  errors  before  resorting  to  checking,  as  this  expedient  means  considerable 
additional  work. 

The  following  directions,  it  is  believed,  will  enable  you  to  detect  most  mistakes. 

1.  Having  made  sure  that  the  trial  balance  is  correctly  added,  find  the  exact  amount  of 
the  error  by  taking  the  difference  between  the  two  sides  of  the  trial  balance.  Look  through 
your  journal  for  this  amount  and  also  for  half  the  amount.  If  you  find  the  exact  amount, 
it  has  probably  been  omitted  in  posting,  or  it  may  have  been  posted  twice.  If  you  find  an 
amount  equal  to  half  the  error,  this  amount  may  have  been  posted  to  the  wrong  side  of  the 
ledger. 

2.  Verify  your  additions  and  subtractions  in  the  ledger. 

3.  See  that  you  have  transferred  your  balances  correctly  from  the  ledger  to  the  trial 
balance.  You  may  have  omitted  an  account,  placed  a  balance  on  the  wrong  side  of  the  trial 
balance,  or  made  a  mistake  in  writing  the  amounts. 

4.  See  if  the  amount  of  the  error  is  exactly  divisible  by  99.  If  so,  the  error  viay  be 
due  to  a  transplacement  of  figures;  for  instance,  $.95  posted  as  $95,  or  $975  posted  as 
;?9.75.  In  the  latter  case,  the  amount  of  the  error  would  be  $965.25.  The  quotient  of 
96525  divided  by  99  is  975,  the  number  transplaced.  If  the  amount  of  the  error  is  exactly 
divisible  by  99,  note  the  quotient ;  look  in  your  journal  for  this  amount,  and  trace  it  to 
your  ledger. 

5.  If  the  amount  of  the  error  is  exactly  divisible  by  9,  it  may  be  due  to  a  transposition 
of  figures  ;  for  instance,  95  posted  as  59,  or  904  posted  as  940.  The  error  in  either  of  these 
cases  would  be  36,  and  the  quotient  obtained  by  dividing  by  9  would  be  4,  the  difference 
between  the  two  figures  transposed.  But  in  such  cases  it  is  usually  best  to  proceed  as 
directed  in  the  next  paragraph  (6). 

6.  If  the  error  is  not  discovered  by  any  of  these  methods,  it  will  be  necessary  to  check 
the  postings  from  the  journal  to  the  ledger,  being  careful  to  check  the  amounts  in  both 
books  as  explained  on  page  25. 

How  to  Correct  an  Error.  —  Wake  no  erasure  of  anything  written  in  ink.  Rule  a  red-ink 
line  through  the  incorrect  entry,  and  write  the  correct  entry  above  it. 

STATEMENTS  OF   RESULTS 

In  addition  to  keeping  the  accounts,  the  bookkeeper  must  be  able  to  show  at  any  time 
the  general  condition  of  the  business  and  whether  it  is  profitable  or  unprofitable.  This  is 
usually  done  at  the  end  of  each  year,  but  it  may  be  required  at  more  frequent  intervals. 

For  this  purpose,  the  bookkeeper  makes  two  detailed  statements.  One  is  known  as  the 
Business  Statement,  or  Statement  of  Losses  and  Gains  ;  it  shows  all  the  losses  and  gains 
and  indicates  the  sources  from  which  they  arose.  The  other  is  known  as  the  Financial 
Statement,  or  Statement  of  Resources  and  Liabilities ;  it  shows  what  property,  or  resources, 
the  business  owns,  and  what  debts,  or  liabilities,  it  has  outstanding.  The  latter  statement 
is  frequently  spoken  of  as  a  Balance  Sheet. 

These  statements  of  results  should  be  written  up  before  closing  the  ledger,  a  process 
which  is  explained  later.  They  show  in  compact  form,  convenient  for  the  proprietor's 
inspection,  the  same  results  of  the  business  as  are  later  shown  on  the  pages  ol  the  ledger  by 
the  closing  process. 


34  MODERN    ILLUSTRATIVE   HOOKKEEPING 

To  be  able  to  write  statements  of  results  and  to  close  tlie  Icdjier  intelligently,  the  student  should  know 
detinitcly  the  meaning  of  certain  terms  used ;  the  following  definitions  should  be  thoroughly  learned. 

An  Account  is  .'i  systematic  collection  of  the  debits  and  credits  of  the  same  name  under  one  head. 

The  General  Results  shown  by  the  difference  between  the  two  sides  of  accounts  are  Losses,  Gains,  Resources, 
and  Liabilities. 

A  Loss  is  what  a  thing  costs  more  than  it  produces. 

A  Gain  is  what  a  tiling  produces  more  than  it  costs. 

A  Resource  is  what  the  business  owns. 

A  Liability  is  what  the  busine.ss  owes. 

In  preparing  statements  of  results  of  your  Flour  and  Grain  business,  as  of  March  31, 
19 — ,  you  can  secure  most  of  tlic  necessary  data  from  the  trial  balance  of  the  same  date, 
referring  to  the  ledger  when  necessary  to  obtain  additional  facts  or  a  clearer  understanding 
of  the  accounts. 

But  there  is  one  resource  that  is  not  shown  on  your  books  at  present,  namely,  the  value 
of  merchandise  on  hand.  It  may  seem  to  you  at  first  that  the  difference  between  the  two 
sides  of  the  Merchandise  account  should  be  the  value  of  goods  on  hand.  This  is  not  the 
case  for  the  reason  that  goods  bought  are  debited  at  cost  price,  while  goods  sold  are  credited 
at  selling  price. 

An  Inventory  is  a  resource  or  liability  not  shown,  or  not  correctly  shown,  by  items  posted 
to  the  ledger.  The  amount  of  an  in\-entory  of  property  is  found  by  "  taking  stock,"  or 
making  a  list  of  the  property  on  hand. 

The  ordinary  method  of  taking  an  inventory  of  merchandise,  that  is,  finding  the  value  of 
goods  on  hand,  is  first  to  determine  the  quantity  of  goods  on  hand  by  going  through  the 
stock,  and  then  to  compute  its  value  at  the  cost  price.  This  is  assumed  to  be  the  present 
value  of  the  goods,  unless  there  has  been  a  decided  rise  or  fall  in  the  market  price  since 
they  were  purchased.  You  may  suppose  that  an  inventory  of  merchandise  has  been  taken 
with  the  following  result.     Copy  this  in  Blank  No.  i,  in  the  part  set  aside  for  inventories. 

Inve.ntorv,  Mak.  31, 


2416.20 


HOW   TO   MAKE    OUT    A    BUSINESS   STATEMENT 

Every  business  will  have  certain  accounts  which  indicate  a  gain  or  a  loss  to  the  business, 
such  as  Merchandise,  ICxpense,  Interest,  Discount,  Real  Estate,  Furniture  and  Fi.xtures,  and 
other  accounts  of  a  similar  nature.  These  are  called  Business  Accounts,  to  distinguish  them 
from  the  rest,  which  show  no  gain  or  loss.  The  chief  business  account  of  any  mercantile 
business  will  be  Merchandise,  for  it  is  from  the  buying  and  selling  of  goods  that  the  principal 
jjrofit  is  derived.  The  business  statement  shows  the  gain  or  loss  arising  from  each  and  all 
of  the  business  accounts.  The  form  of  such  a  statement  is  shown  at  the  top  of  the  opposite 
page. 

At  the  top  of  a  page  of  journal  paper  write  pKsimss  Sttitiiitm/,  .U,rr.  jr,  jg — (cur- 
rent year).  All  losses  are  then  to  be  entered  in  the  left-hand  or  debit  column  of  the  state- 
ment, and  all  gains  in  the  right-hand  or  credit  column. 


2830  bu. 

Corn, 

1250    " 

Oats, 

400    " 

Rye, 

213  brls. 

Hour, 

19— 

y.t 

990.50 

30^, 

375- 

55  ^> 

220. 

390, 

830.70 

STAIEMKNTS   Uf    RESULTS  — MARCH 


36 


y■Ci-u.J^4^-?'^.l^d.J^■(^^l^^fi^^ 


T 


Z-fZ.^C^yt^ 


/  2.^ 


Vro 


^^r 


sT-fJ" 


^•J'tff 


1.  The  amount  of  merchandise  which  you  have  on  hand,  as  shown  by  your  inventory, 
is  $2416.20.  VsIniQihis  snva&ii&r  ATerchandise,  value  of  unsold ;  write  it  short,  as  shown  in 
the  above  model. 

2.  The  excess  of  the  debit  over  the  credit  side  of  your  Merchandise  account,  as  shown 
by  your  trial  balance,  is  $1736.50.  Enter  this  amount  after  IFej-cliandisc, excess  of  cost  over 
sales,  writing  it  directly  under  the  amount  of  the  inventory,  as  shown  in  the  model. 

3.  It  is  evident,  from  the  above,  that  you  have  paid  out  $1736.50  more  than  you  have 
received  for  merchandise,  and  if  you  had  no  goods  on  hand,  your  loss  would  be  $1736.50; 
but  it  is  estimated  that  the  goods  you  have  on  hand  are  worth  $2416.20,  and  could  be  sold 
immediately  for  this  amount,  so  in  reality  you  haveaprofit  of  $679.70  ($2416.20—  $  1736.50 
—  $679.70).  Write  the  amount  of  your  profit  in  the  Gain  column  after  Mercliandise,  Gain. 
(See  model.) 

4.  The  debit  side  of  your  Expense  account  is  $104  greater  than  the  credit  side,  indicat- 
ing a  loss  of  $  104  on  expense.     Place  this  amount  after  Expense  in  the  Loss  column. 

5.  Find  the  totals  of  Loss  and  Gain  columns.  The  total  of  your  Gain  column  is  $679.70, 
and  the  total  of  your  Loss  column  is  $104;  the  difference  between  these  totals  is  $575.70. 
As  the  Gain  column  is  the  greater,  it  is  evident  that  the  business  has  made  a  profit,  during 
February  and  March,  of  $575.70.  Write  this  amount  in  the  left-hand  column  in  red  ink 
after  the  words  Net  Gain,  which  should  also  be  in  red  ink.  Now  rule  and  foot  both  col- 
umns, and  write  the  footings  as  illustrated  in  the  model.  The  net  gain  item  is  written  in 
red  ink,  because  that  is  the  rule  whenever  the  entry  indicates  the  difference  between  two 
columns,  or  between  two  sides  of  an  account.  Such  red  ink  entries  are  always  placed  oa 
the  smaller  side,  and  show  that  the  opposite  side  or  column  is  greater  than  the  column  con- 
taining the  red  ink  entry  by  the  amount  of  such  entry. 


HOW   TO   MAKE   OUT   A   FINANCIAL    STATEMENT 

Accounts  which,  as  a  rule,  show  either  a  resource  or  a  liability  are  called  Finance  Ac- 
counts, since  they  represent  money  value  or  money  indebtedness.  They  represent  the  re- 
sources, or  property,  of  the  business,  and  its  liabilities,  or  debts,  and  include  such  accounts 
as  Cash,  accounts  with  persons.  Bills  Receivable,  and  Bills  Payable. 

The  difference  at  any  time  between  the  resources    and   the   liabilities  of  any   business 


36 


MODERN   ILLUSTRATIVIC   BOOKKEEPIXG 


will  show  the  present  worth  of  that  business,  and  the  Proprietor  should  have  credit  for 
this  amount.  To  ascertain  the  present  worth  of  your  business  on  March  31,  you  should 
make  out  a  financial  statement,  such  as  is  illustrated  by  the  following  form. 


/ 


3/,-^, 


y 


^SZ-t^ 


-/^tJ^-i^. 


^r^i^ 


'^lyC/i^ 


'^'z^^f-i^^  ^-t^-^T^  .^/Ltt^n^ef^ 


/zia 


r 


r  /  i-  ! -T    ^r/t  2^ 


At  the  top  of  a  paije  of  journal  paper  write  Fitiaitcia!  Statement,  Mar.  31,  19 —  (current 
year).  Write  on  the  statement  the  names  of  all  accounts  in  your  ledger  except  your  own, 
Expense,  and  Loss  and  Gain,  as  shown  in  the  above  model,  but  do  not  yet  put  any  figures 
in  the  amount  columns.  The  left-hand  or  debit  column  of  your  statement  is  used  for  your 
resources;  the  right-hand  or  credit  column  is  used  for  your  liabilities.  In  making  up  your 
statement  all  resources  should  be  given  first,  then  the  liabilities. 

It  will  be  noted  that  Mercli.inclise  account  appears  in  both  the  busine.ss  and  the  financial  statements.  Since 
Merchandise  account  shows  a  gain  or  a  loss,  it  is  a  business  account,  and  must  be  made  a  part  of  the  business 
statement ;  but  it  also  shows  a  resource  in  the  form  of  an  inventory,  and  therefore  most  be  included  in  the  finan- 
cial statement.  Any  business  account  that  has  an  inventory  must  be  included  in  the  financial  statement  as  well 
as  in  the  business  statement. 

1.  After  Meychandisc,  in  the  Resource  column,  enter  the  value  of  merchandise  you  have 
on  hand,  as -shown  by  your  inventory  (S  24 16.20). 

2.  The  debit  side  of  your  Cash  account,  as  shown  by  your  trial  balance,  is  Si  145. 50 
more  than  the  credit  side.      Write  this  amount  after  Cash  in  the  Resource  column. 

3.  The  debit  side  of  vour  Bills  Receivable  account,  as  shown  by  your  trial  balance,  is 
$619.50  more  than  the  credit  side.      Enter  this  amount  in  your  Resource  column. 

4.  The  debit  side  of  the  account  of  W.  A.  Scott,  as  shown  by  your  trial  balance,  is  S  m 
more  than  the  credit  side,  which  indicates  that  W.  A.  Scott  owes  your  business  this  amount. 
This  is  a  resource,  and  should  be  entered  after  W.  A.  Scott  in  the  Resource  column. 

5.  Treat  the  accounts  of  S.  A.  Dodge  &  Co.,  J.  S.  Sumner.  E.  H.  French  &  Co., 
Emerson  &  Sons,  Wm.  Archer  &  Co.,  Weston  &  Hill,  and  Roberts  Bros,  in  a  similar  manner. 


FINAXCIAL   STATE>rEXT  —  MARCH 


37 


6.  By  referring  to  your  trial  balance,  you  find  that  the  credit  side  of  your  Bills  Payable 
account  is  $845  more  than  the  debit  side,  hence  you  have  a  liability  of  $845  in  outstanding 
notes.     This  amount  should  be  entered  after  Bi//s  Payable  in  your  Liability  column. 

7.  Your  trial  balance  shows  that  the  credit  side  of  the  account  of  A.  J.  Lane  is  $302 
more  than  the  debit  side,  which  shows  that  you  owe  A.  J.  Lane  ^  302.  This  is  a  liability  of 
the  business,  and  should  be  entered  after  A.J.  Lane  in  the  Liability  column. 

8.  Treat  the  accounts  of  W.  H.  Stevens,  F.  A.  Smith  &  Co.,  Rice,  Miller  &  Co.,  H.  S. 
Clough  &  Co.,  and  Kidder  &  Hill  in  a  similar  manner. 

9.  Tind  the  difference  between  your  Resource  and  Liability  columns.  It  is  $3042.70. 
Write  this  amount  in  your  right-hand  column,  in  red  ink,  after  the  words  Present  Worth. 
The  difference  between  the  resources  or  property  of  any  business  and  its  liabilities  or  debts 
will  show  the  present  worth  of  that  business.  In  case  the  liabilities  or  debts  should  exceed 
the  resources  or  property,  it  is  evident  that  there  would  be  no  present  worth,  and  that  the 
business  would  be  insolvent ;  that  is,  it  could  not  pay  its  debts  if  called  upon  to  do  so.  Rule 
and  foot  as  in  model. 

Now  make  out  a  proof  of  your  financial  statement,  following  the  form  shown  below. 


^y, 


A- 


t.-^iz^L^'rL.^-''^'t^  ^/C-^^L^. 


/f- 


^^~^yk^^4^ 


fnOi-ItlETOR. 


•SJffl:>. 


S^A-Xi^   ^^P^^ii-/ 


3  /S/"  ZoT 


J  S^f  o 


The  amount  of  the  Proprietor's  investment  is  taken  from  the  credit  side  of  his  ledger 
account.  In  your  ledger  this  amount  is  $2500.  The  amount  of  his  withdrawals  is  taken 
from  the  debit  side  of  his  ledger  account.  In  your  ledger  this  amount  is  $33.  Subtract 
the  withdrawals  from  the  investment,  to  find  the  net  investment,  in  your  case  ^2467. 
Enter  this  in  the  left-hand  money  column,  as  illustrated  in  the  model. 

The  net  gain  of  the  business,  as  shown  by  your  business  statement,  is  $575.70.  Write 
this  amount  after  Net  Gain. 

Your  net  gain  added  to  your  investment  should  give  the  present  worth  of  the  business, 
which  is  $3042.70.  Write  this  after  Present  Worth,  in  red  ink,  as  in  the  model.  The 
amount  $3042.70  agrees  with  the  amount  shown  in  the  financial  statement,  hence  the  state- 
ment is  correct.  If  the  business  shows  a  loss,  the  amount  of  the  loss  should  be  subtracted 
from  the  net  investment  to  find  the  present  worth. 


HOW    TO    CLOSE    THE    LEDGER 

The  ne.xt  two  pages  represent  a  model  ledger  properly  closed  and  ruled, 
should  carefully  examine  the  form  and  ruling. 


The  student 


38 


MODEKN    U.l.U-STRATlVE   BOOKKEEPING 


•  y     •■ 


/\y'£^^^*JieL.€:-f^ 


/ 


^ 


7  i'j-z  ■// 


€^/z^gZy:f'Z^!L.d.^ 


/' 


tZ-'f^J 


zs 

J/ 


'.:^' 


-J<^^isz-&-«>2-^ 


-i-r    /     1  (_-^i^:^2.-*SJ'?«-<Z5?-^«>' 


/ 

/  fj  ^ 

'(f'\ 

V 

*4 

/  zi  0 

.J- 

kT 

f^y 

jr<?i 

<f 

C 

"^f7 

6^ 

/Z 

/ 



2a 

~J  2   /  i^ 

1 

■  *t5^«-^i;*-i-^ 


6zz  d'ff 

I 

^A^Z  ZJ- 
3Z/  o\z^ 


;^j^ 


^^ 


/s.' 


/  z^ 


y>^>^L<£.ey 


■^ 


^ 


S-:^^^-<S'!»2..^.^^      I  3 


'   r  ' 


Hf 


'-d^ 


>pO 


/?\ 


'fA7 


my 


/I^^^U,^ 


t 


/- 


^7 


F-^^' 


MODEL   LEDGKR   CLOSED 


3!1 


^ 


/■ 


■'7 


..C^ 


-/Pa./^ 


.2/ 


^.  ^  ^ ^^^^^^y^-r3^ y  y  /^^i-Cr/-^ 


A 


/f  - 


r 


a^ 


<!Z^<l^^J^   'x^  gg^. 


A 


y  - 


^    ^  t? 


^S 


^ 


V2. 


(i'^V 


^^ 


'/L^ 


6  / z^ a 


Ja 


■,--A2. 


■JO 


MODERN   ILLUSTRATIVIi   BOOKKEEPING 


Exercise.  —  On  lodger  paper  practice  the  rulings  illustrated  below  by  the  heavy  lines.  All  the  rulings  for 
each  line  shouki  be  drawn  without  changing  the  position  of  the  ruler.  Note  wheie  each  line  begins  and  ends. 
(Compare  with  e.xercise  on  page  20.) 


In  closing  a  ledger,  you  should  close  the  business  accounts  first. 

Merchandise.  — The  first  account  in  your  ledger  which  shows  a  loss  or  a  gain  is  Merchan- 
dise. The  debit  side  of  this  account  is  $  1736.50  more  than  the  credit  side.  This  indicates 
that  your  purchases  of  merchandise  amount  to  $  1736.50  more  than  your  sales ;  but  you  still 
have  on  hand  (see  inventory,  page  34)  $2416.20  worth  of  merchandise.  It  is  presumed  that 
you  could  sell  this  merchandise  immediately  for  its  cost  value,  S  2416.20 ;  therefore  Merchan- 
dise should  be  credited  for  this  amount.  Enter  your  inventory  on  the  credit  side  of  your 
Merchandise  account,  in  red  ink.  Write  j/ in  the  day  column  (as  the  date  is  March  31),  the 
word  Inventory  in  the  explanation  column,  and  2416.20  in  the  amount  column.  (See  illustra- 
tion below;  also  see  page  38.)  The  footing  of  the  credit  side  of  your  Merchandise  account, 
including  the  inventory,  is  now  $8533.20.  The  footing  of  the  debit  side  is  $7853.50.  As 
the  footing  of  the  credit  s'de  is  the  larger,  it  is  evident  that  there  has  been  a  gain  of  $679.70 
(S  8533. 20— $7853.50=  S  679. 70).  Enter  the  gain,  in  red  ink,  on  the  debit  side  of  Mer- 
chandise account,  writing  j>/  in  the  day  column,  the  word  Gain  in  the  explanation  column, 
and  6jg.-o  in  the  amoimt  column.  (See  illustration  below;  also  page  38.)  Rule  and  foot 
the  Merchandise  account,  as  shown  below,  and  enter  your  inventory  again,  in  black  ink, 
below  the  ruled  lines  on  the  debit  side,  with  date  Apr.  i  and  the  current  year. 


0 

'     '     / 

^  ';-'^^ 

^ 

^<k^/ 

1 

'7   - 

/ 

z 

//-/^ 

J- 

z 

^  0  ff 

\za 

^ 

/^^J- 

'S'l^ 

1     1 
1 

z      rsa 

zj- 

zr 

za 

■s 

^z^ 

Sff 

— <i?^r:iU<<?^t^ 

r  ^  r  f 

/  2  0   ~ 

'^^ez^ 

zd 

:S 

7 

7 

f/Z 

/  Z  Z  ff 
4^/  ff 

7  '• 

y.r 

f      6.s^' 

zz 

/.'    f/.^ 

z^ 

Zf 

//     /Off 

i     f    X     J 

rf-  # 

i 

3 . 

,^^ 

t  ;ri 

'i'J- 

\.J^'^^t-^''-£'9'Z-^!ff'i^ 

re^j: 

1 

II 

fS 

I* 

■"/ 

Z  i>/Z 

CLOSINCi   THE    Lr.nr.ER  — MARCH 


41 


When  you  began  the  closing  process,  your  ledger  was  in  balance,  as  shown  by  the  trial 
balance.  A  double-entry  ledger  should  always  be  in  balance;  that  is,  its  debits  should 
always  equal  its  credits.  In  closing  the  Merchandise  account  you  made  a  credit  entry  of 
^2416.20  with  no  corresponding  debit.  But  by  transferring  this  amount,  in  black  ink,  to 
the  debit  side  of  Merchandise  on  the  first  line  below  the  ruling  under  date  of  April  i,  you 
restore  the  equilibrium  of  the  ledger,  so  far  as  this  entry  is  concerned.  You  also  show 
what  the  merchandise  has  cost  which  you  now  have  on  hand. 

All  red-ink  entries  which  you  make  in  your  ledger  must  be  transferred  to  the  ojiposite 
side  of  the  account  in  which  they  are  made,  or  to  the  opposite  side  of  some  other  account; 
otherwise  the  ledger  will  be  thrown  out  of  balance. 

You  made  an  entry  of  the  gain  (S  679.70),  in  red  ink,  on  the  debit  side  of  your  Mer- 
chandise account,  with  no  corresponding  credit.  Transfer  this  amount,  in  black  ink,  to  the 
credit  side  of  the  Loss  and  Gain  account,  writing  the  ledger  page  of  Merchandise  account 
in  the  folio  column,  Mdsc.  in  the  e.Nplanation  column,  and  the  date  in  the  date  column  (see 
illustration  below);  also  write  the  ledger  page  of  Loss  and  Gain  account  in  the  folio  col- 
umn of  the   Merchandise  account.     You  have  now  restored  the  equilibrium  of  the  ledger 

J 


-Z'-^Z^'^^^n^ 


/7xd^ 


J^ei^i^/J  /  J'^^riU-£^, 


/ze> 


V 


.fa 


and  placed  the  amount  of  your  gain  from  merchandise  on  the  gain  side  of  the  Loss  and 
Gain  account.  All  gains  of  the  business  are  placed  on  the  credit  side  of  this  (Loss  and 
Gain)  account,  and  all  losses  on  the  debit  side.  In  the  space  for  the  explanation  we  write 
Aldsc.  to  indicate  the  source  from  which  the  gain  was  derived.  On  page  38  the  student 
should  trace  the  gain  from  the  Merchandise  account  to  the  Loss  and  Gain  account. 

Expense.  —  The  debit  side  of  the  E.xpense  account  is  $  104.  As  there  is  nothing  on  the 
credit  side,  it  is  evident  that  expense  has  cost  the  business  $  104.  Write  the  amount  of 
this  loss,  with  date,  explanation,  and  folio,  on  the  credit  side  of  the  Expense  account,  in  red 
ink,  and  rule  and  foot  the  account.     (See  illustration  below.) 


?>^^2..£y9^Z-J^^ 


'V    - 

/^ 

z 

SJ  .:  ^^ 

/^ 

vjT 

^  0 

1 

^^ 

2J- 

/ 

Cz 
i  7  •» 

J:a 

Zf 

/  0           A^-J" 

3/ 

/  z 

6d- 

J'^  ZJ-i> 

^3Z.\-S-fl 

\ 

MODERN   ILLUSTRATIVE   150UKKEEPIXG 


Transfer  the  loss  (S  104)  of  the  Expense  account  to  the  debit  side  of  the  Loss  and  Gain 
account,  thus  restoring  the  equilibrium  of  the  ledger.  Write  Expense  on  the  same  line  with 
the  amount  to  show  what  account  caused  the  loss.  Do  not  forget  to  write  the  page  of  ex 
pense  account  in  the  folio  column  of  Loss  and  Gain  account,  and  the  page  of  Loss  and  Gain 
account  in  the  folio  column  of  Expense  account.     (See  illustration  below.) 


JJ 


Y^' 


J" 


^ ''  1:'^^ 


--<;^^^«^^/^-;^;^Cf^*z<^^<iv-' 


yJ~J  2.  •J'i?  ^''i-  :^i-^i-^J  /  ^/i- 


/  Z<p//^a 


Loss  and  Gain.  —  Vour  Loss  and  Gain  account  now  contains  on  the  debit  side  the  names 
of  all  accounts  that  show  a  loss  to  the  business,  and  on  the  credit  side  the  names  of 
all  accounts  that  show  a  gain.  As  all  the  gains  and  los.ses  are  given,  it  is  evident  that  the 
difference  between  the  sides  of  the  Loss  and  Gain  account  will  show  the  net  gain  or  net  loss 
to  the  business.  As  the  credit  side  of  this  account  is  $575.70  in  excess  of  the  debit  side,  it 
is  evident  that  the  business  has  made  a  net  gain  of  $  575.70.  Enter  this  amount  on  the 
debit  side  of  the  Loss  and  Gain  account,  in  red  ink,  writing  the  name  of  the  proprietor 
(vourself)  in  the  explanation  column,  and  the  date  in  the  date  column;  and  rule  and  foot 
the  account.     (See  illustration  below.) 


<=Ufr7^-^J  >^<^ 


3 


^-^z^^-^?^-/ 


A'  V 


i^ei^ 


/    /  Z  (?/  ^if 


As  the  proprietor  has  increased  the  value  of  the  business  by  conducting  it  so  as  to  make 
a  net  gain,  the  amount  of  the  net  gain  (S  575.70),  as  shown  by  the  Loss  and  Gain  account, 
should  be  transferred  to  the  credit  of  the  Proprietor's  (your)  account.  Write,  in  black  ink, 
on  the  credit  side  of  the  Proprietor's  account.  Mar.  ji,  Net  Gain,  $S75-7o-  Write  the 
proper  page  number  in  the  folio  column  of  each  account.  (See  illustrations  above  and 
below.) 


ZJ^s 


yT^ixA^  / 


V 

\/z 


^^2Z-!S-^»2^ 


y  iP  ff  O 


CLOSING  THE    LEDGER  — MARCH 


43 


Proprietor's  Account. — The  debit  side  of  the  Proprietor's  account  shows  withdraw;ds  to 
the  amount  of  $33;  the  credit  side  shows  an  investment  of  $2500  and  the  gain  $575-70, 
malting  a  total  of  $  3075.70.  It  is  evident  that  the  present  worth  of  the  business  is  the 
difference  between  the  two  sides  of  the  Proprietor's  account.  This  difference  is  $3042.70. 
Mat:e  an  entry  on  the  debit  side  of  the  Proprietor's  account,  in  red  ink,  for  this  amount, 
and  rule  and  foot  the  account.  Transfer  the  amount,  in  black  ink,  to  the  oi)posite  side 
of  the  Proprietor's  account  on  the  first  line  below  the  ruling,  with  the  date  Apr.  i  and  the 
current  year. 

(The  following  represents  the  form  of  a  Proprietor's  account  properly  ruled  and  footed.) 


/ 


i^zyi^^^'t.-^y 


z/^ 


yV^t:id^.'S 


::...^i^.^ 


7 


/  z^ 


/z'i   /s-^ 

\7  ■¥  /?  fi 


y  /^y.A  ?  o 


^-zz-^-^^z-^ 


/  y  i>  IP  a 
s  I    {^y<rS0 


tL, 


CA^b^y;  / —■^:i.<l^.^'t./>^^^^i-i!^    Y'^'^'^^^ 


I 


Closing  Finance  Accounts.  —  It  is  not  customary  to  close  any  accounts  but  the  business 
accounts  and  Proprietor's  account.  If  a  personal  account  balances  at  any  point,  it  should  be 
ruled,  as  directed  on  page  26  and  illustrated  on  page  39.  If  it  is  desired  to  close  any 
finance  account  at  any  time,  this  may  be  done  by  finding  the  difference  between  the  two 
sides  and  entering  it  on  the  smaller  side,  in  red  ink,  writing  the  word  Balance  in  the 
explanation  coUmni.  (See  Cash  account  in  model  ledger,  page  39.)  The  account  should 
then  be  ruled  and  footed  and  the  balance  transferred,  in  black  ink,  to  the  opposite  side  of 
the  account  below  the  ruled  linos,  with  the  date  of  the  following  day. 

Use  of  Red  Ink.  —  Notice  the  fact  that  the  closing  entries  in  the  ledger  are  made  in  red 
ink,  and  that  all  transfers  are  made  in  black  ink.  When  an  entry  is  made  in  red  ink  in 
closing  the  ledger,  it  signifies  that  the  amount  is  on  the  opposite  side  from  where  it  belongs 
according  to  the  rules  for  journalizing.  Never  enter  the  same  item  twice  in  succession  in 
red  ink ;  but  always  see  that  an  item  entered  in  red  ink  is  entered  on  the  ojiposite  side  in 
black.  (Some  accountants  use  no  red  ink,  but  make  all  entries,  and  even  rulings,  in  black. 
The  beginner,  however,  will  find  that  the  proper  use  of  red  ink  will  help  him  to  avoid  errors.) 

Inspection  by  Teacher.  — ^  Your  ledger  is  now  closed.  Present  the  work  to  your  teacher 
for  inspection,  after  making  sure  that  every  detail  has  received  proper  atention,  and  that  no 
dates,  page  marks,  or  explanations  have  been  omitted. 


PROOF    TRIAL    BALANCE 

After  closing  the  ledger,  the  student  should  take  off  a  proof  trial  balance  in  order  to  be 
sure  that  the  ledger  is  in  balance  before  making  additional  entries  in  it. 

At  the  top  of  a  sheet  of  ordinary  journal  paper,  write  the  heading  Proof  Trial  Balance, 
Mar.  ji,  and  the  current  year.      Do  not  write  the  names  of  the  accounts  in  the  explanation 


44  MODERN   ILLUSIRATIVE    BOOKKEEPING 

column,  as  the  amounts  are  sufficient  for  this  work,  but  insert  the  ledger  papje  numbers,  as 
usual,  in  the  folio  column.  Begin  with  the  first  account  in  your  ledger.  If  the  balance  is 
on  the  debit  side,  write  the  balance  in  the  debit  column  of  your  proof  trial  balance;  if  the 
balance  is  on  the  credit  side,  write  the  balance  in  the  credit  column.  In  the  present  instance 
the  balance  as  shown  by  your  Proprietor's  account  is  S 3042.70.  Enter  this  in  the  credit 
column  of  your  trial  balance.  The  balance  as  shown  by  your  Merchandise  account  (as 
brought  below  the  ruled  lines)  is  S  2416.20.  Enter  this  in  the  debit  column  of  your  trial  bal- 
ance. There  is  no  balance  shown  by  E.xpense  account  or  Loss  and  Gain  account,  so  omit 
these  accounts  from  your  trial  balance.  The  balance  shown  by  your  Cash  account  is 
Si  145.50.  Enter  this  in  the  debit  column  of  your  trial  balance.  Continue  this  process 
until  the  balances  of  all  the  accounts  in  your  ledger  have  been  placed  on  your  trial  balance, 
then  foot  your  trial  balance.  If  it  balances,  present  it  to  your  teacher  for  examination  and 
approval. 

TEST    LEDGER    NO.  1 

You  are  now  ready  to  proceed  with  test  ledger  No.  i,  as  follows: 

1.  Rule  off  all  personal  accounts  that  balance. 

2.  Take  a  trial  balance. 

3.  Make  business  and  financial  statements ;  inventory  of  merchandise  is  $  2530.45. 

4.  Close  the  ledger  according  to  instructions  given  below. 

5.  Take  a  proof  trial  balance. 

6.  Present  all  your  work  to  the  teacher  for  examination  and  approval. 

How  to  close  Test  Ledger  No.  1.  — -Write,  in  red  ink,  on  the  credit  side  of  the  Merchan- 
dise account,  Invoitory,  with  the  amount,  $2jjo.4j,  and  the  date  Sept.  30.  Then  find  the 
difference  between  the  two  sides  of  the  account,  being  sure  to  add  the  inventory  to  the 
credit  side.  Enter  the  difference  on  the  smaller  side  of  the  account,  the  debit  side  in  this 
instance,  in  red  ink,  writing  also  the  word  Gain,  and  the  proper  date  and  page  number. 
Rule  and  foot  the  account.  Transfer  the  inventory  to  the  debit  side  of  the  Merchandise 
account  with  date  of  Oct.  i,  ig — ,  and  transfer  the  gain  to  the  credit  side  of  Loss  and  Gain 
account,  writing  the  date  Sept.  30,  the  Merchandise  folio,  and  the  amount.  In  what  color 
should  transfers  be  made.'     (See  pages  41,  43.) 

Write  on  the  credit  side  of  Expense  account,  Sept.  30,  Loss,  7,  S  /^i,  in  red  ink.  Rule  and 
foot  the  account.     Transfer  the  red-ink  entry  to  the  opposite  side  of  Loss  and  Gain  account. 

Close  your  Loss  and  Gain  account  into  the  Proprietor's  account  by  writing,  in  red  ink, 
on  the  smaller  side  of  the  Loss  and  Gain  account",  T.  M.  Hunter,  and  the  difference  between 
the  sides.  Rule  and  foot  the  account.  Transfer  the  red-ink  entry  to  the  opposite  side  of 
T.  M.  Hunter's  account,  in  black  ink,  with  the  explanation,  Xct  Gain. 

Close  T.  M.  Hunter's  account  by  writing,  in  red  ink,  Pirsint  JFort//,  on  the  debit  side 
with  the  amount  necessary  to  balance  the  account.  Rule  and  foot.  Transfer  the  present 
worth  to  tiie  opposite  side  of  T.  M.  Hunter's  account,  with  date  Oct.  /. 

Remember  that  closing  or  balancing  entries  are  always  first  made  in  red  ink,  and  trans- 
fers in  black  ink. 

TEST    LEDGER    NO.  2 

Test  ledger  No.  2  is  a  little  more  extensive  than  test  ledger  No.  i.  The  amount  of  the 
merchandise  inventory  is  S  4502.96. 

Rule  off  all  accounts  that  balance,  take  a  trial  balance,  make  statements,  close  the  ledger. 


TEST   LEDGERS  45 

take  a  proof  trial  balance,  and  present  all  the  work  to  }our  teacher  for  examination  and 
approval. 

How  to  close  Test  Ledger  No.  2. — Close  Merchandise  account  as  in  tesc  ledger  No.  i, 
and  as  in  your  ledger  for  March. 

Close  Expense  account  as  in  test  ledger  No.  i,  and  as  in  your  ledger  for  March. 

Close  Loss  and  Gain  account  as  in  test  ledger  No.  i,  and  as  in  your  ledger  for  March. 

Close  T.  \\".  Bowen's  account  as  the  Proprietor's  account  is  closed  in  test  ledger  No.  i, 
and  in  your  ledger  for  March. 

Be  sure  that  you  transfer  all  red-ink  entries  to  the  o]iposite  side  of  the  ledger.  Always 
make  closing  or  balancing  entries  in  red  and  transfers  in  black. 

Make  sure  that  all  dates  and  page  numbers  are  properly  entered. 

QUESTIONS 

1.  Define  buying  on  account.     Define  selling  on  .-iccount. 

2.  When  are  personal  accounts  credited.'     When  debited? 

3.  Give  full  directions  tor  cliecking  the  posting.     What  is  the  object  of  this  checking? 

4.  Why  should  tlie  Mercliandise  account  be  debited  for  freight  and  dnivage  on  merchandise? 

5.  Why  should  the  proprietor  be  debited  for  money  taken  from  the  business? 

6.  Define  a  promissory  note. 

7.  What  are  bills  receivable? 

S.  Wlien  should  Bills  Receivable  account  be  debited?     When  credited  ? 

g.  What  are  bills  payable? 

10.  When  should  the  Bills  Payable  account  be  credited?     When  debited? 

11.  Why  are  others'  written  promises  spoken  of  as  Receivable  and  your  own  written  promises  as  Payable? 

12.  Whicli  side  of  Bills  Receivable  account  is  always  the  larger  if  tliere  is  any  difference?     Why? 

13.  Which  side  of  Bills  Payable  account  is  always  the  larger  if  there  is  any  difference?     Why? 

14.  Name  other  accounts  on  which  you  may  always  know  which  side  is  the  larger  if  there  is  a  difference- 
Give  reason. 

15.  Define  indorsement.     What  is  the  effect  of  an  indorsement  ? 

16.  How  does  the  trial  balance  of  IVIarch  31  differ  from  those  previously  taken? 

17.  Name  and  define  the  statements  of  results.     By  what  other  names  are  these  statements  known? 

18.  What  is  the  purpose  of  making  out  these  statements?     When  and  liow  often  are  they  made? 

19.  Define  an  account ;  a  loss;  again;  a  resource  ;  a  liability. 

20.  Define  an  inventory. 

21.  Why  is  it  necessary  to  take  an  inventory  of  merchandise  before  making  a  statement? 

22.  How  is  a  merchandise  inventory  taken? 

23.  What  price  is  given  the  goods? 

24.  Define  business  accounts.     Give  exampbs  of  such  accounts. 

25.  What  information  should  a  business  statement  contain? 

26.  Define  finance  accounts.     Give  e.vamples.     In  what  statement  should  these  accounts  appear? 

27.  What  accounts  should  be  included  in  both  statements  ? 

28.  How  is  tile  present  worth  of  any  business  determined  ? 

29.  Explain  tlie  method  of  taking  a  proof  of  the  financial  statement. 

30.  What  cl.iss  of  accounts  should  be  closed  first  ? 
ji.    What  should  1)6  done  with  inventories  ?     Why? 

32.  Why  is  it  necessary  to  enter  the  resource  inventory  on  the  credit  side  in  order  to  find  the  loss  or  gain 
on  the  account  ? 

•^3.    In  what  color  should  inventories  appear  on  the  ledger  ?     Wliv  ? 


46  MODKRN   ILLUSTRATIVE  BOOKKKKPING 

34.  In  what  color  should  closing  entries  always  be  first  written  ?     Why  ? 

35.  In  wliat  color  should  transfers  always  be  written  ?     Why  ? 

36.  What  is  the  object  of  opening  a  Loss  and  Gain  account  in  the  ledger  ? 

37.  When  all  transfers  have  been  made,  what  should  the  credit  side  of  the  Loss  and  Gain  account  show  ? 

38.  What  should  the  debit  side  of  the  Loss  and  Gain  account  show  ? 

39.  What  should  the  dilTcrence  between  the  two  sides  of  the  Loss  and  G.iin  account  show  ?     To  wliat  ac- 
count should  this  difference  be  transferred  ?     Why  ? 

40.  How  should  the  Proprietor's  account  be  closed  ? 

41.  W'here  should  the  Proprietor's  present  worth  appear  after  the  ledger  is  closed  ? 

42.  Where  should  the  inventory  of  merchandise  appear  after  the  ledger  is  closed  ? 

43.  If  finance  accounts  are  closed,  what  is  the  process  ? 

44.  What  is  the  object  of  a  second  trial  balance  after  closing  the  ledger  ?     I  low  is  it  taken? 

BRIEF  SUMMARY  OF  RULES  FOR  JOURNALIZING 

Each  Account  Representing  Property,  Kjrpenses,  or  Allowances  —  General  Itule 

Debited    when     the    thing    represented  Credited  when    the    thing    represented 

comes  into  the  business   or  when   it   costs       goes  out  of  the  business  or  when  it  produces 
the  business  wikie.  value  for  the  business. 

The  following  are  special  cases  of  the  above ;  notice  that  eacli  special  rule  agrees  with  the  general  rule. 

(■(I  si, 
Debited  for  all  cash  received.     Rule  i.  Credited  for  all  cash  paid  out.     Rule  4. 

Merchandise 

Debited  for  the  cost  price  of  all  goods  bought  for  Credited  for   the   sale   price   of  all   goods   sold, 

the  purjxjse  of  selling ;  and  for  freight,  cartage,  etc.,         Rule  6. 
on  merchandise.     Rules  5  and  13. 

licdl  Kstate 

Debited  for   the  cost  of  houses  and  lands   \m\-  Credited  for  the  sale  price  of  houses  and  lands 

chased,  and  for  sums  paid  for  their  improvement  and         sold,  and  for  any  returns  such  as  rent, 
permanent  repair. 

I'..rpvnse 
Debited  for  all  expenses  of  the  business.     Rule  3.  Credited   with    returns    on   anything   previously 

debited  to  expense. 

mils  Receivable 

Debited  when  another's  written  promise  comes  Credited  when  the  business  disposes  of,  or  gives 

into  the  business.     Rule  15.  out,  another's  written  promise.     Rule  17. 

Hills   rai/ahle 

/debited  when  the  business  redeems,  or  pays,  its  Credited  when  the  business  issues,  or  gives  out, 

own  written  promi.se.     Rule  18.  its  own  written  promise.     Rule  16. 

liiicrtst 
Debited  when  interest  is  allowed  by  the  business  Crifr/V/tVi' when  interest  is  allowed  to  the  business  by 

to  others  (for  then  it  costs  the  business  value).  others  (for  then  it  produces  value  for  the  business). 

Iti scon  lit 

Debited  when  discount  is  allowed  by  the  business  Credited  when  discount  is  allowed  to  the  business 

to  others  (for  then  it  costs  the  business  value).  by  others  (for  then  it  saves  or  produces  value  for  the 

business). 

Each  Personal  Account 

Debited  when    the    person    becomes   in-  Credited  when  the  business  becomes  in- 

debted to  the  business  or  when  the  business        debted  to  the  person  or  when  he  pays  the 
pays  him  on  account.      Rules  7,  10,  and  12.        business  on  account.     Rules  8,  9,  and  11. 


JOURNAL  ENTRIES  OF  MORE  THAN  TWO  ITEMS 


47 


The  I'roprletor 

Debited  for  all  cash,   merchandise,  etc.,  Credited  for  all   amounts  which    he   in^ 

which  he  takes  out  of  the  business.    Rule  14.        vests  in  the  business.     Rule  2. 


JOURNAL   ENTRIES   OF   MORE   THAN   TWO   ITEMS 

The  ability  to  determine  readily  the  debits  and  credits  of  any  given  business  transaction 
is  an  essential  qualification  of  a  competent  bookkeeper.  If  the  teacher  considers  additional 
drill  necessary  for  developing  this  ability,  the  following  exercises  (pages  47-52)  will  be 
found  useful. 

We  have  learned  that  the  debits  and  credits  of  every  transaction  must  be  equal  in  amount. 
In  the  preceding  work  each  transaction  requires  but  one  debit  item  and  one  credit  item. 
However,  an  entry  may  consist  of  several  debits  and  one  credit,  several  credits  and  one 
debit,  or  several  debits  and  several  credits;  but  in  every  instance  the  sum  of  the  debits  of 
any  transaction  must  equal  the  sum  of  the  credits. 

lournalize  the  following  transactions  on  loose  journal  paper,  making  constant  use  of  the 
rules  on  pages  46,  47. 

Several  Debits  and  One  Credit 

January  i,  19 — .  —  Sold  F.  E.  Clark  25  brls.  beef  at  $16;  total,  $400.  Received  in 
part  payment  cash,  S150.     Balance  on  account,  $250. 

Instructions.  — In  this  case  it  is  clear  that  Qrs//  is  to  be  debited  for  $  1 50,  and  F.  E.  Clark 
for  $250;  while  Merchandise  is  to  be  credited  for  $400.  The  following  illustrates  the  form 
of  entry  required  for  this  kind  of  transaction. 


■^zy 


/s^ 


-~^b-tzyi^^^-yi-<: 


'  2.J-. 


/^(Pt? 


Instead  of  an  entry  in  the  above  form,  many  bookkeepers  would  make  two  separate  entries,  one  debiting 
F.  E.  Clark  and  crediting  Aldse.  for  $400,  and  the  otlier  debiting  Cash  and  crediting  F.  E.  Clark  for  $150. 
That  is,  the  transaction  would  be  treated  as  though  divided  into  two  separate  ones.  Either  method  is  correct ; 
notice  that  the  final  result  in  the  ledger  accounts  would  be  the  same  by  both  methods. 

Every  one  of  the  following  transactions  could  in  a  similar  way  be  divided  up  into  two  or  more  transactions 
each  requiring  a  journal  entry  of  one  debit  and  one  credit.  The  teacher  will  find  it  a  helpful  exercise  to  require 
entries  in  both  forms,  with  a  comparison  of  tlie  results  in  each  case. 

January  2. — Sold  Albert  Stewart  30  brls.  apples  at  $3;  total,  $90.  Received  in  part 
payment  cash,  $55.     Balance  on  account,  30  days,  $35. 

January  3. — Sold  J.  D.  Lawrence  55  brls.  flour  at  $7,  25  brls.  beef  at  $16.50;  total, 
S797.50.  Received  in  payment  cash,  $275,  and  his  30-day  note  for  the  balance,  $522.50. 
(What  are  the  two  accounts  debited  .-") 

January  4.  —  Sold  D.  C.  Schneider  100  brls.  apples  at  $3.50,  50  bu.  potatoes  at  60^ 
total,  S3S0.  Received  in  payment  his  30-day  note,  $100;  John  Smith's  lo-day  note,  $80 
cash  for  the  balance,  S  200.  (Debit  Bills  Receivable  separately  for  each  of  the  two  notes 
the  entry  will  have  three  debit  items.) 


48 


MODERN  ILLUSTRATIVE  BOOKKEEPING 


January  5  — Frank  Miller,  being  unable  to  pay  in  full  his  6  months'  note  for  $  1000 
which  you  hold  and  which  is  due  to-day,  arranges  with  you  to  renew  one-half  of  the  note 
for  30  days.     Consequently,  he  gives  you,  for  his  old  note,  S  500  cash  and  a  new  note  for  S  500. 

Set'ertU  Credits  anil  One  Debit 

January  6.  —  Bought  of  Marion  Douglas  250  brls.  flour  at  S7;  total,  $  1750.  Gave  in 
part  payment  cash,  S875,  and  my  60-day  note  for  S  500.  The  balance,  $375,  is  to  remain 
on  account. 

The  following  illustrates  tlie  form  of  entry  for  this  kind  of  transaction. 


/ 
/^^. 


/  0  0 


3. 


'i^i?-?'Z^Lyr-zi^^ 


January  8.  —  Bought  of  Henry  Lindlinger  100  bu.  peas  at  $2.35,  25  bu.  clover  seed  at 
$4.50;  total,  S  347.50.  Delivered  in  payment  my  30-day  note  for  S200,  and  cash  for  the 
balance,  S  147.50. 

January  g. —  Received  cash,  $  750,  from  Benj.  D.  Collins  in  payment  of  balance  due  on 
his  account,  $  1 50;  in  payment  of  his  note  due  to-day,  S  300 ;  and  also  to  pay  for  bill  of  goods 
sold  him  to-day  as  follows  :-*5  hf.  chts.  Japan  tea,  375  lbs.,  at  30^  per  lb.;  10  mats  Java 
coffee,  750  lbs.,  at  25  >^  per  lb. ;  total,  $  300. 

Several  Debits  and  Several  Credits 

January  9.  —  Bought  of  C.  N.  Brown  10  brls.  sugar,  2600  lbs.,  at  5  P*,  $130;  5  shares 
City  Bank  stock  at  S  125,  S625.  Gave  in  part  payment  cash,  S  200,  and  my  note  for  S200; 
the  balance  to  remain  on  account,  $355- 

The  new  feature  here  is  the  purchase  of  City  Bank  stock.  The  general  rule  applies : 
debit  what  comes  into  the  business  or  costs  value.  The  only  question  in  any  such  case  is 
what  name  to  give  the  account.  Some  would  make  it  Stocks  and  Bonds ;  others.  City  Bank 
Stock.     The  following  illustrates  the  form  of  entry  required  for  this  kind  of  transaction. 


■£-e^. 


/ay'j:^^<n^^ 


f 


j:. 


/si 


1 


■^o/r 


SUrPLEMP:XTARV    EXERCISK  — NO.    I  49 

January  io.  —  Bought  of  John  Hamilton  a  house  and  lot  for  $5000;  also  500  brls. 
apples  at  $4,  S2000.  Gave  in  payment  John  Smith's  note  for  $  1500;  my  60-day  note  for 
$3000;  and  cash,  $2500.     (Debit  A'tv?/  Estate  for  the  cost  of  the  house  and  lot.) 

January  i  i.  —  Sold  Norris  Bros.  1000  bu.  wheat  at  $  i  ;  total,  $  1000.  Received  in  pay- 
ment my  note,  now  due,  for  $500,  and  John  Brown's  note  for  $525.  I  pay  Norris  15ros.  the 
difference  in  cash,  $25. 

January  12.  —  Student  (the  business)  owes  Henry  Nussbaum  $500  on  a  note,  and  $300 
on  account.  Both  amounts  being  now  due,  student  pays  them  by  delivering  to  Nussbaum 
cash  from  the  business,  $700,  and  from  his  private  funds  (an  additional  investment),  ^100. 


SUPPLEMENTARY   EXERCISE  — No.  i 

The  entries  for  this  supplementary  exercise  are  to  be  made  on  loose  journal  and  ledger 
paper.  If  you  are  in  doubt  as  to  the  correctness  of  a  journal  entry  which  you  are  about 
to  make,  refer  to  the  rules  on  pages  46,  47. 

January  i,  19 — .  — (Student)  commenced  business  this  day  with  ;^4000  cash  capital. 

January  2.  —  Bought  of  Wm.  Brown,  for  cash,  100  brls.  flour  at  $  5  ;  total,  $  500. 

January  3.  —  Sold  H.  Davis  for  cash,  50  brls.  flour  at  $6;  total,  } 

January  4. — -Bought  of  Hart  &  Co.,  for  cash,  100  brls.  pork  at  $9,  and  100  brls.  beef 
at  ;$  1 2  ;  total,  .? 

January  5.  —  Sold  Chas.  D.  Gordon,  for  cash,  25  brls.  flour  at  ^6.25,  and  50  brls.  beef 
at  $  14 

January  6.  —  Paid  rent  of  store  in  cash,  iS  50. 

January  8.  —  Bought  of  J.  D.  Morgan,  on  account,  100  brls.  flour  at  $  5. 

January  10.  —  Sold  A.  O.  Steele,  on  account,  50  brls.  flour  at  $6. 

January  12.  —  Bought  of  D.  Hammond,  on  account,  100  brls.  salt  at  $  1.25,  and  50  brls. 
beef  at  $  12. 

January  15.  —  Sold  James  T.  Wood,  on  account,  25  brls.  pork  at  §  10.50,  10  brls.  salt  at 
$  1.50,  and  30  brls.  flour  at  $6. 

January  16.  —  Sold  Larkin  Bros.,  for  cash,  50  brls.  pork  at  $10.50,  and  25  brls.  flour' 
at  $6. 

January  20.  —  Bought  for  cash  2  tons  coal  for  use  in  store,  S  10.50. 

January  22.  —  Bought  of  Clark,  Good  &  Co.,  for  cash,  100  brls.  flour  at  $  5. 

January  23. — -Received  cash  of  A.  O.  Steele  in  full  of  account,  $300. 

January  25.  —  Sold  James  T.  Wood,  on  account,  40  brls.  flour  at  $6. 

January  26.  —  Paid  D.  Hammond  cash  to  apply  on  account,  $  400. 

January  27.  —  Sold  Chas.  D.  Gordon,  for  cash,  25  brls.  salt  at  $  1.50,  and  25  brls.  beef 
at  $  14. 

January  29.  — Paid  clerks'  salaries  for  January  in  cash,  $  175. 

January  30.  —  Received  cash  of  James  T.  Wood  on  account,  $200. 

January  31. ^Bought  of  D.  Hammond,  on  account,  50  brls.  pork  at  $9. 

Present  your  journal  to  the  teacher  for  inspection,  and,  if  it  is  approved,  jjost  the  entries 
to  the  ledger  (loose  paper).  Allow  one-half  page  each  for  yowx {Proprietor  s)7iQ(zowwt  and  Ex- 
pense, one  page  each  for  Cnsli  and  Mercliandise,  and  one-fourth  page  each  for  other  accounts. 

Foot  the  ledger  accounts  in  pencil  and  take  off  a  trial  balance. 

Present  journal,  ledger,  and  trial  balance  at  the  teacher's  desk  for  approval. 


50  MODERN   ILLUSTRATIVE   BOOKKEEPING 

February  i,  19 — .  —  Sold  H.  Gait,  for  cash,  25  brls.  salt  at  $  1.50. 

Ff.bruakv  2.  —  Bought  of  Hart  &  Co.,  for  cash,  25  brls.  lard,  5000  lbs.,  at  8\^. 

Febrl'ary  3.  —  Paid  J.  D.  Mori^an  cash  on  account,  S  100. 

February  5.  —  Bought  of  Bell  Bros.  &  Day  on  account,  30  days,  10  brls.  A.  sugar,  2500 
lbs.,  at  6|  ff,  and  10  hf.  chts.  Japan  tea,  600  lbs.,  at  50^. 

Febklaky  6.  —  Paid  gas  bill  for  January  in  cash,  36.50. 

February  8.  —  Sold  A.  O.  Steele,  on  account,  10  brls.  lard,  2000  lbs.,  at  12'.  ^. 

February  9.  —  Received  cash  of  James  T.  Wood  on  account,  $  100. 

February  id.  —  Sold  Sherman,  French  &  Co.  60  brls.  beef  at  $  14.    Received  part  pay- 
ment in  cash,  S240;  balance  on  account.     (For  form  of  entry,  sec  page  47.) 

February  12.  — Student  drew  cash  for  private  use,  S  100. 

February  13.  —  Bought  of  Miller  &  Beach  50  brls.  beef  at  S  12,  and  50  brls.  pork  at  S9. 
Made  part  payment  in  cash,  $250;  balance  on  account. 

February  13.  —  Received  cash  of  A.  O.  Steele  on  account,  $  100. 

February  14.  —  Sold  D.  W.  Powers,  on  his  note  at  10  days,  50  brls.  pork  at  S  10.50. 

February  i  5.  —  Bought  of  Chas.  H.  Norris,  on  my  note  at  10  days,  50  brls.  flour  at  $  5. 

February  17.  —  Sold  O.  W.  Gardner,  for  cash,  3  brls.  A.  sugar,  625  lbs.,  at  7)^. 

February  19.  —  Sold  Freeman  &  Johnson,  on  their  note  at  15  days,  with  interest,  40 
brls.  beef  at  $  14.     (Make  no  entry  for  the  interest  until  the  note  is  paid.) 

*Fi:bruary  21.  —  Bought  of  Long  &  Martin,  on  my  note  at  10  days,  with  interest,  50 
brls.  pork  at  $9,  and  50  brls.  beef  at  S  12. 

February  22.  —  Paid  Miller  &  Beach  cash  on  account,  $200. 

February  23.  —  Received  of   James  T.  Wood  his  note  at   15  days  in  full  of  account, 

^397- 50- 

February  24.  —  Received  cash  of  D.  W.  Powers  for  his  note  of  the  14th  inst.,  $  525. 

February  25.  —  Paid  my  note  of  the  15th  inst.  in  favor  of  Chas.  H.  Norris,  in  cash,  S250. 

February  26. — Gave  D.  Hammond  my  note  at  10  days  on  account,  S  300. 

February  28. — -Paid  rent  and  salaries  in  cash,  $  175. 

Copy  the  inventory,  as  given  below,  into  your  journal,  immediately  following  the  trans- 
actions for  February. 

Inventory  of  Merchandise,  Feb.  28,   19 — 


1 30  brls.  Plour, 

5- 

650. 

40     "     Salt, 

1.25 

50. 

10  hf.  chts.  Japan  Tea,  600  lbs. 

,     .50 

300. 

7  brls.  A.  Sugar,  1875  lbs., 

•o6| 

121.88 

75     "     Beef, 

12. 

900. 

125     "     Pork, 

9- 

1125. 

15     "     Lard,  3000  lbs.. 

.os.V 

255- 

3401.88 

As  the  business  of  February  is  a  continuation  of  that  of  January,  post  it  under  the  same 
ledger  headings,  opening  new  accounts  only  when  they  are  required.  Allow  one-fourth 
page  space  for  each  new  account  in  this  month.  Do  not  leave  blank  lines  between  the 
items  of  January  and  those  of  February  in  old  accounts.     (See  model  ledger  on  page  8.) 

Your  ledger  now  contains  the  entries  of  two  months.  Rule  off  any  accounts  that  balance. 
Foot  the  accounts  in  pencil  and  take  off  a  trial  balance  on  a  sheet  of  journal  paper. 

Your  trial  balance  should  show  a  debit  balance  of  $2 523  for  Ciis//,  and  a  debit  balance 
of  $2540  for  Mdse, 


SLTn.EMKNTARV    EXERCISE  — NO.    i  51 

Make  business  and  financial  statements,  according  to  the  models  on  pages  35,  36.  These 
statements  should  show  a  net  gain  of  $444.88,  and  a  present  worth  of  $4344.88.  Present 
the  statements  to  the  teacher  for  inspection,  then  close  the  ledger. 

Review  your  work  carefully,  and  if  you  are  satisfied  that  entries  and  ruling  are  correct, 
hand  journal,  ledger,  trial  balance,  and  statements  to  the  teacher  for  approval. 

March  i,  19 — . —  Paid  Miller  &  Beach  cash  on  account,  $300. 

March  2. —  Sold  Alex.  Goodman,  on  his  note  at  10  days,  with  interest,  50  brls.  flour  at 
$6;   10  brl-s.  beef  at  $14. 

March  3. —  Paid  February  gas  bill  in  cash,  $6. 

March  3.  —  Paid  my  note  of  Feb.  21,  favor  of  Long  &  Martin,  and  interest,  in  cash; 
face  of  note,  $1050;  interest,  10  days,  $1.75.  (The  total  paid  is  $1051.75.  Interest  to  the 
extent  of  $1.75  has  been  allowed  to  others,  and  has  cost  the  business  value.  Debit  i?///4' 
Payable  for  face  of  note;  debit  Interest  for  $1.75;  credit  Cash  for  the  total  paid.) 

March  5. — Gave  Bell  Bros.  &  Day  my  note  at  10  days,  with  interest,  in  full  of  account, 
$462.50. 

March  6.  —  Bought  of  E.  L.  &  I-^.  B.  King  50  brls.  beef  at  $12.  Made  part  payment 
in  cash,  $200;  balance  on  account. 

March  6.  —  Sold  R.  H.  Day,  for  cash,  5  hf.  chts.  Japan  tea,  300  lbs.,  at  6oi. 

March  6.  —  Received  cash,  $  561.40,  of  Freeman  &  Johnson  for  their  note  of  Feb.  19,  and 
interest.  Face  of  note,  $560;  interest,  15  days,  $1.40.  (The  business  has  received  value, 
$  1.40,  produced  by  interest.    J/Iake  one  debit  and  two  credits.) 

March  8. — Paid  rent  of  sM-e  in  cash,  $50. 

March  8.  —  Paid  my  note  S  Feb.  26,  favor  of  D,  Hammond,  in  cash,  $300. 

March  10. — Sold  A.  O.  St^le  on  account,  10  days,  25  brls.  pork  at  $  10.50;  5  brls.  lard, 
1000  lbs.,  at  10^;  20  brls.  flour  at  $6. 

March  10.  —  Received  cash  of  James  T.  Wood  for  his  note'of  Feb.  23,  $397.50. 

March  ii.  —  Received  of  Sherman,  French  &  Co.,  in  full  of  account,  as  follows:  cash, 
$200;  their  note  at  60  days,  $400. 

March  12.  —  Bought  of  Beach  &  Gould,  on  my  note  at  90  days,  100  brls.  flour  at  $5. 

March  12.  —  Received  cash  of  Alex.  Goodman  for  his  note  of  March  2,  and  interest. 
Face  of  note,  $440;  interest,  10  days,  yi^.     (Entry  similar  to  last  one  for  March  6.) 

March  13.  —  Sold  Collins  &  Carpenter,  40  brls.  salt  at  $1.50;  50  brls.  pork  at  $10.50; 
50  brls.  beef  at  $14.  Received  part  payment  in  cash,  $785;  their  note  at  30  days  for 
balance. 

March  15.  —  Paid  J.  D.  Morgan  cash  on  account,  $200. 

March  15.  —  Paid  my  note  of  5th  inst.,  favor  of  Bell  Bros.  &  Day,  and  interest,  in  cash. 
Face  of  note,  $462.50;  interest,  10  days,  'j'j'^.     (Entry  similar  to  last  one  for  March  3.) 

March  16.  —  Bought  of  Leffingwell  Mfg.  Co.,  for  cash,  a  safe  for  office  use,  $475. 
(Debit  Expense.^ 

March  16.  —  Bought  of  Gardner  &  Gardner,  50  brls.  beef  at  $12.  Paid  them  cash,  $300; 
gave  them  my  note  at  60  days  for  balance. 

March  17.  —  Sold  Sherman,  French  &  Co.  on  account,  60  days,  7  brls.  A.  sugar,  1S75  lbs., 
at  7^;   5  hf.  chts.  Japan  tea,  300  lbs.,  at  60^. 

March  18. — Collins  &  Carpenter  prepaid  their  note  of  13th  inst.  in  cash,  less  discount. 
Face  of  note,  $500;  discount  off,  25  days,  $2.08;  cash  received,  $497.92.  (A  discount  of 
$2.08  has  been  allowed  by  the  business  to  another  party,  and  has  cost  the  business  value. 


52  MODERN   ILLUSTRATIVE  BOOKKEEPLVG 

Debit  Casli  for  the  amount  received;  debit  Discount  for  $2.08;  credit  Bills  Receivable  for 
$500,  the  face  of  the  note.) 

March  19.  —  Bought  of  Miller  &  Beach,  on  account,  25  brls.  pork  at  §9;  10  brls.  lard, 
2000  lbs.,  at  8J^. 

March  21.  — Sold  James  T.  Wood,  on  account,  10  brls.  pork  at  $10.50;  10  brls.  beef 
at  $14. 

March  22.  —  Prepaid  my  note  of  the  12th  inst.,  favor  of  Beach  &  Gould,  in  cash,  less  dis- 
count. Face  of  note,  S500;  discount  off,  80  days,  $6.67;  cash  paid,  S493.33.  (Debit  Bills 
Payable  for  face  of  note;  credit  Discount  for  the  S6.67  allowed  you,  the  amount  saved  or 
produced  for  the  business  by  the  discount;  credit  Cash  for  the  amount  paid.) 

March  23.  —  Received  cash  of  A.  O.  Steele  on  account,  $  150. 

March  24.  —  Paid  in  cash,  Scrantom  &  Co.'s  bill  for  books,  stationery,  etc.,  for  office  use, 

SI5-75- 

March  26.  —  Bought  of  J.  D.  Morgan,  on  account,  50  brls.  flour  at  $5. 

March  27.  —  Sold  VVm.  N.  Marsh,  25  brls.  pork  at  $9;  25  brls.  beef  at  $14.  Received 
cash  on  above,  $225  ;  his  note  at  3  mos.  with  interest,  for  balance,  $350. 

March  28.  —  Gave  Miller  &  Beach  my  note  at  2  mos.,  to  apply  on  account,  S300. 

March  29.  —  Paid  clerks'  salaries  in  cash,  S125. 

March  30.  —  Received  cash  of  James  T.  Wood  on  account,  S  100. 

March  31.  — Sherman,  P'rench  &  Co.  prepaid  their  note  of  the  i  ith  inst.,  in  cash,  less  dis- 
count. Face  of  note,  $400;  discount  off,  40  days,  S2.67;  cash  received,  $397- 33-  (Hntry 
similar  to  that  for  March  18.) 

Copy  the  following  inventories  in  your  journal  and,  before  commencing  to  i)ost,  hand 
your  journal  to  your  teacher  for  approval. 

Inventorv  of  Merchandisi:,  March  31,   19 — 

210  brls.  Flour,  5.  1050. 

80     "     Beef,  12.  960. 

40     "     Pork,  9.  360. 

20     "     Lard,  4000  lbs.,  .08.]  340.          2710. 

Invkntorv  of  Expense,  March  31,   19 — 
Office  Safe,  valued  at  475. 

The  business  of  March,  being  a  continuation  of  that  of  January  and  February,  should  be 
posted  under  the  same  ledger  headings,  so  far  as  they  go.  Give  each  new  account  in  this 
month  one-fourth  page  space. 

When  the  posting  is  finished,  foot  the  accounts  in  pencil.  Include  all  the  items  of 
January,  P^cbruary,  and  March,  except  those  items  that  ajipear  above  rulings  in  accounts 
that  have  been  closed.      Rule  off  any  account  that  balances.     Take  off  a  trial  balance. 

Make  a  business  statement  and  present  it  to  the  teacher  for  inspection. 

Make  a  financial  statement,  and  close  the  ledger. 

Hand  your  journal,  ledger,  trial  balance,  and  statements  to  the  teacher  for  approval. 


FLOUR,   GRAIN,  AND    PRODUCE    BUSINESS  —  APRIL 

BUSINESS    PRACTICE 

You  are  now  to  act  as  bookkeeper  for  James  M.  Hastings,  who  commences  the  Flour, 
Grain,  and  Produce  business  to-day  (ApriL  i ),  at  146  Ehn  St.,  your  city.  You  will  receive 
from  him  a  salary  of  $60  per  month.  Your  teacher  will  furnish  you  all  the  vouchers  (busi- 
ness papers)  and  blank  forms  that  are  necessary  in  performing  the  numbered  transactions 
which  follow. 

You  will  get  the  same  experience  you  would  in  a  real  business,  so  far  as  it  is  possible 
within  the  limits  of  a  school  to  give  this  experience.  Bills  for  merchandise  bought,  and 
other  business  papers,  will  come  from  the  pad  of  "  Incoming  Vouchers,"  just  as  they  would 
come  to  the  business  house  by  mail.  These  papers  are  similar  in  every  respect  to  those 
used  in  business.  All  papers  issued  by  the  business  are  to  be  written  up  by  you,  and  all 
transactions  must  be  recorded  in  the  books  exactly  as  in  real  business. 

As  Mr.  Hastings  attends  to  the  buying  and  selling,  and  is  absent  from  the  city  a  large 
part  of  the  time,  it  will  be  necessary  that  you  sign  and  indorse  notes,  checks,  and  other 
papers  during  his  absence,  besides  keeping  the  books  of  the  business.  In  order  to  do  this, 
you  must  have  a  power  of  attorney.  Mr.  Hastings  gives  this  to  you;  take  it  from  the  top 
of  the  pad  of  incoming  vouchers  and  fill  out  the  blank  spaces.  Read  it  carefully  and  see 
what  powers  it  confers  upon  you,  then  fold  lengthwise  and  write  on  the  back  of  the  upper 
left-hand  corner.  Power  of  Attorney,  J.  M.  Hastings,  April  1,  and  the  current  year,  and  place 
the  paper  in  the  envelope  called  "  Voucher  File,"  which  you  will  find  in  your  large  envelope 
marked  "Business  Forms." 

A  power  of  attorney  is  a  legal  document  which  confers  upon  the  person  named  in  it  the  right  to  perform 
certain  acts  specified  therein,  in  tlie  name  of  some  other  person  who  issues  the  power  of  attorney.  It  is  gener- 
ally 'vitnessed  by  a  notary  public,  who  stamps  the  document  with  his  seal. 

Such  a  power  of  attorney  as  you  have  received  would  be  presented  at  the  bank  with  which  the  maker  does 
business,  and  also  at  the  post  office  and  express  office,  as  it  gives  the  holder  the  right  to  indorse  posf  office  and 
express  money  orders  in  the  name  of  the  maker. 

You  will  receive  all  goods  purchased,  deliver  the  goods  sold,  and  make  in  the  books  of 
the  business  a  full  and  complete  record  of  all  transactions  which  may  occur. 

The  work  in  your  books  will  not  be  like  the  work  of  any  other  student.  Your  selling 
price-list  will  be  assigned  by  your  teacher  from  the  numbered  lists  found  in  the  text-book, 
page  69.  Your  price-list  will  be  unlike  that  of  any  other  student,  and  you  must  adhere 
strictly  to  this  price-list  in  order  to  get  correct  results. 

Do  not  compare  your  books  with  those  of  other  students.  The  results  will  be  different, 
and  you  cannot  learn  too  early  the  habit  of  self-reliance.  Understand  why  you  make  each 
record,  and  you  will  succeed. 

In  doing  the  work  which  follows,  proceed  in  the  proper  order,  by  performing  the 
transaction  first  and  making  the  entry  for  it  in  your  books  afterwards.  The  performance 
of  the  transaction  will  consist  of  receiving  the  money  or  business  papers  involved  in  the 
transaction  (usually  by  separating  them  from  the  pad  of  incoming  vouchers),  and  paying 
out  all  money  and  writing  all  papers  required  to  be  delivered  to  the  other  party  to  the  trans- 
action. 

53 


54 


MODERN   ILLUSTRATIVE   BOOKKEEPING 


Before  making  the  entry  in  your  books  for  any  transaction,  determine  first  which  accounts 
are  affected  by  that  transaction,  and  then  determine  which  account  is  to  be  debited  and 
which  is  to  be  credited,  by  applying  the  rules  for  journalizing  which  you  have  learned  in  the 
preceding  work. 

Books  Kept. — The  books  which  you  will  keep  in  this  work  are  the  journal-daybook  and 
the  ledger  as  principal  books,  and  the  check  book  as  an  au.xiliary  book. 

A  Principal  Book  is  one  from  which  or  to  which  posting  is  clone. 

An  Auxiliary  Book  is  one  which  helps  to  complete  the  record  by  supplying  certain  details,  but  in  which  no 

debits  and  credits  are  recorded,  and  from  which,  consequently,  no  posting  can  be  done. 

TRANSACTIONS 

No.  1.  —  April  i,  19 — .  After  reading  page  53  carefully,  ask  your  teacher  to  assign  j-ou  a 
seUing  price-list,  and  take  from  your  incoming  voucher  pad  the  cash  which  shall  constitute 
Mr.  Hastings's  investment.  After  this  has  been  done,  count  your  cash  and  place  it  in  the 
envelope  entitled  "Cash  Drawer,"  which  you  will  find,  with  others,  in  the  large  envelope  of 
Business  Forms. 

Determine  the  debit  by  rule  i,  page  11  or  46;  determine  the  credit  by  rule  2,  page  11 
or  47.  For  transaction  similar  to  this,  see  transaction  No.  i,  page  10.  Make  proper  entry 
in  your  journal-daybook  on  the  first  blank  page  after  the  March  journal.  The  following 
illustrates  the  form  of  your  entry. 


y.y 


'f 


~;^'^z.<^^-3*C- 


t^-^'r?i»c-<?3-z-<*-^e-«:u<;-^7;i^^5^ 


^^^  i> 


-i^^^ 


No.  2. — Ai'RiL  I.  Mr.  Hastings  has  rented  the  building  at  146  Elm  St.  from  R.  B. 
Hines;  he  is  to  pay  $  100  per  month  rent.  Pay  the  rent  for  April  in  cash,  placing  the  cash 
in  your  "Cash  Paid  Out "  envelope. 

In  paying  out  money  always  make  payment  in  bills  of  the  largest  denominations  pos- 
sible. In  this  instance  you  should  take  a  hundred-dollar  bill.  If  you  have  occasion  to  pay 
out  S75,  you  should  make  payment  by  using  one  fifty-dollar  bill,  one  twenty-dollar  bill,  and 
one  five-dollar  bill. 

Take  from  the  incoming  voucher  ])ad  the  lease  and  receipt  numbered  2.  All  the 
vouchers,  cards,  etc.,  on  this  pad  are  numbered  to  correspond  with  the  numbers  of  the 
transactions  in  this  book.  Be  sure  that  the  voucher  number  in  each  case  agrees  with  the 
transaction   number   before    making   a   book   entry.      Read    the   lease   carefully   and   see 


BUSINESS    PKACTICF,  —  Al'KII. 


55 


what  rights  and  restrictions  it  mentions.      Put  it  and  the  receipt  in  your  "Voucher  File" 
envelope. 

Determine  the  dehit  by  rule  3,  page   n  or  46;  determine  the  credit  by  rule  4,  page  11 
or  46.     The  following  illustrates  the  form  of  your  entry. 


~^.-'tZ-J^Jz^ 


J 


^-o-yL-^ 


7^ 


7^ 


No.  3.  —  April  2.  Incoming  voucher  No.  3  shows  a  cash  purchase  from  Daniels  Bros, 
of  200  brls.  flour  at  $4-20  per  brl,  and  400  bu.  oats  at  23  ^  per  bu. 

Detach  from  the  pad  the  invoice  or  bill,  and  the  merchandise  cards  representing 
the  flour  and  oats.  See  that  you  have  on  your  cards  the  quantity  of  flour  and  oats  called 
for  in  the  bill,  and  if  so,  check  each  item  on  the  bill,  using  pen  and  ink  and  placing  a 
check  mark  in  the  vertical  column  at  the  left  of  the  bill.  See  that  the  multiplications  and 
the  addition  are  correct,  placing  a  check  mark  against  each  correct  amount  at  the  right. 
If  the  bill  is  correct,  write  O.K.  with  your  initials  underneath,  in  the  lower  left-hand 
corner.  The  following  represents  the  form  of  a  bill  after  it  has  been  treated  as  explained 
above. 


imil^  Mi®!D^^CIIRllCa 


Directors- 


^^W^^'/.Vt 


Sir''       ^^^rA^:^4f^  ^^.  /,.  -/^  . 
5old  to  -^^^^^^^^^.^ 


^'.K'.-J-^^,  ^-^-^^^-x.^-^^^-^^ i^ 


Z^- 


-^-.^l^. 


-d^Z^.^ 


_i£i 


/P^.'^^tC^^.-.  ~V7.  -^.^r7-r^-^^.^i^^.^ 


?.-^ 


^.^r7-7i~ 


-J^rS^ 


7!^^-^^ 


Z^g'Ti^^^?^ 


/i^  ^ 


z_ 


z_ 


/ 2.,r/A/^  /7 


o6 


MODERN   ILLUSTRATIVE   BOOKKEEriNG 


If  anything  is  wrong  with  the  invoice  or  the  merchandise,  ask  your  teacher  (representing 
Daniels  Hros.)  to  correct  it.  If  they  are  correct,  take  from  your  Cash  Drawer  the  money 
to  pay  the  bill,  and  place  it  in  "Cash  Paid  Out"  envelope.  Place  the  merchandise  in  the 
envelope  marked  "Store  Room." 

Determine  the  journal  entry  by  referring  to  the  rules  on  page  46.  The  following  illus- 
trates the  form  of  your  entry.  As  you  have  the  invoice  to  refer  to  at  any  time,  there  is  no 
need  of  inserting  the  items  in  the  journal  entry. 


^■j-c'^o 


2.^0 


Fold  the  bill  lengthwise,  face  outward,  and  write  across  the  face,  Entonl,  with  tlie  date 
underneath.     Place  it  in  the  envelope  entitled  "  Voucher  File." 

No.  4.  —  April  2.  Tliis  bill  (No.  4)  shows  a  purchase  from  D.  Deavenport  &  Co.,  for 
cash. 

Check  and  O.K.  the  liill  as  in  No.  3.  Take  cash  to  pay  the  bill  from  your  Cash  Drawer, 
and  place  in  the  "Cash  Paid  Out"  envelope.  Place  the  merchandise  in  the  "Store  Room." 
Your  journal  entry  will  be  similar  to  that  for  No.  3.  Fold  the  bill,  write  Entered  zcross  the 
face,  with  the  date,  and  file  as  in  No.  3.  Follow  all  instructions  in  the  e.\act  order  in  which 
they  are  given. 

No.  5.  —  April  3.  Mr.  Hastings  has  taken  this  order  from  J.  A.  Barker,  and  received 
the  cash  for  the  goods,  50  brls.  fiour,  50  brls.  apples. 

Copy  the  selling  price-list  which  your  teacher  assigned  you  on  voucher  No.  5  o,  and  paste 
it  on  the  inside  of  the.  front  cover  of  your  text-book. 

Select  from  your  Store  Room  the  merchandise  which  the  order  calls  for,  and  make  out 
a  bill  to  J.  A.  Barker  at  your  selling  price  on  one  of  the  blank  billheads  which  you  will  find 
in  your  envelope  of  Business  Forms.  Use  one  of  the  bills  in  your  Voucher  P""ile  as  a  model. 
Place  the  order  in  yuur  Voucher  File. 

After  making  out  the  bill,  review  your  multiplications  and  addition  so  as  to  be  positive 
that  they  are  correct.  Remember  that  bills  sent  from  an  office  viust  be  right.  If  the  bill  is 
correctly  made  out,  its  amount  will  agree  with  the  cash  received  with  the  order  (No.  5),  and 
you  may  receipt  the  bill  (by  writing  on  it  Received  Payment,  J.  J/.  Hastings,  by  and  your 
initials)  and  place  the  cash  in  your  Cash  Drawer. 

Make  the  proper  journal  entry  for  the  transaction.  Place  the  merchandise  and  the  re- 
ceipted bill  in  the  envelope  entitled  "  Vouchers  for  Others." 

The  following  illustrates  the  form  of  the  journal  entry. 


v^ 


<r2.\ra 


<r2.^o 


r.USIXKSS   rRACTICIC  — APRIL  57 

Notice  that  all  merchandise  which  you  sell  should  be  itemized  in  your  joiirr.al-da\book, 
while  that  which  you  buy  should  be  entered  in  total  only.  In  selling  merchandise  you  give 
a  bill  to  the  person  to  whom  the  sale  is  made,  and  to  preser\-e  a  complete  record  of  the  sale 
you  must  enter  the  items  singly  in  your  journal-daybook,  for  the  purchaser  may  require  of 
vou  a  duplicate  bill  at  any  time,  and  unless  you  have  the  items  in  )i)ur  books  it  will  be 
impossible  or  inconvenient  to  prepare  the  duplicate. 

When  you  buy  merchandise,  you  receive  a  bill,  and  as  this  bill  is  on  file  you  can  refer  to 
it  at  any  time  that  you  desire  to  examine  the  items,  so  that  it  is  not  necessary  to  enter  more 
than  the  total  in  your  journal-daybook. 

No.  6.  —  April  3.     Bought  merchandise  for  cash,  from  L.  A.  Wright  &  Co. 

Detach  from  the  pad  the  invoice  and  the  merchandise  cards  numbered  6,  and  compare 
the  merchandise  cards  with  the  items  on  the  invoice;  if  they  are  correct,  check  the  items 
and  verify  the  calculations,  and  then  pay  the  bill  by  taking  the  proper  amount  of  cash  from 
your  Cash  Drawer  and  placing  it  in  the  envelope  entitled  "  Cash  Paid  Out." 

Place  the  merchandise  in  the  Store  Room  and  make  proper  entry  in  your  journal- 
daybook.  Fold  and  file  your  invoice  according  to  instructions  given  in  transaction  No.  3, 
page  56. 

No.  7. — April  4.     You  have  purchased,  for  cash,  books  and  stationery  as  per  invoice. 

Take  the  invoice  from  your  incoming  voucher  pad,  verify,  and  if  it  is  correct,  write  O.K. 
and  your  initials  and  pay  the  bill,  placing  the  cash  in  the  envelope  entitled  "Cash  Paid  Out." 
Make  proper  entry.     (Review  rule  3,  page  11.)     Fold  and  file  the  bill. 

No.  8.  —  April  4.     Sell  E.  M.  Smythe  &  Co.,  for  cash,  merchandise  as  per  order. 

Perform  the  transaction  and  make  the  entry  according  to  directions  given  in  transaction 
No.  5,  page  56.  Do  not  forget  to  place  the  merchandise  cards,  with  a  receipted  bill,  in 
the  "  Vouchers  for  Others  "  envelope.     Always  count  your  cash  before  receipting  a  bill. 

No.  9. — April  4.  You  have  bought  merchandise  on  account,  as  per  invoice,  from 
Hatheway  &  Reynolds. 

Detach  the  invoice  and  the  merchandise  cards  from  the  pad.  Verify  the  calculations 
and  if  the  bill  is  correct,  O.K.  it,  and  place  the  merchandise  in  the  Store  Room.  Make  the 
proper  entry  in  your  journal-daybook.     (Review  rule  9,  page  22.) 

This  bill  is  not  receipted.  Why  not.'  Fold  lengthwise,  write  E/ircrcd  across  the  face, 
with  the  date,  and  place  it  in  your  Invoice  File.  Hereafter  place  all  incoming  unpaid  bills 
in  the  Invoice  File  without  further  special  instructions. 

No.  10. —  April  4.  FIRST  REPORT.  Detach  the  report  blank  (No.  10)  from  your 
incoming  voucher  pad  and  write  your  name,  report  number,  and  price-list  number-  in  the 
proper  places.  From  your  journal  entries  determine  how  much  cash  has  been  received. 
This  will  be  shown  by  taking  the  sum  of  your  cash  debits.  Write  the  amount  in  the  amount 
column  of  the  report,  opposite  Cus/i  Ri-ccivcd.  From  the  cash  credits  in  the  journal  find 
how  much  cash  has  been  paid  out,  and  write  the  amount  in  the  report  opposite  Cash  Paid 
Out.  Opposite  Cash  on  Hand  write  the  difference  between  the  cash  received  and  the  cash 
paid  out.  Count  the  cash  in  the  "Cash  Drawer,"  and  if  it  agrees  with  the  cash  on  hand 
as  shown  on  the  report,  the  cash  is  said  to  be  in  balance,  and  you  may  place  the  amount 
opposite  Cash  in  Drawer  on  the  report. 


58 


MODERN  ILLUSTRATIVE   BOOKKEEPING 


If  the  cash  in  drawer  does  not  agree  with  the  amount  on  the  report,  the  discrepancy  may  be  due  to  an  error 
in  the  journal  or  to  a  mistake  in  paying  out  the  cash.  Go  over  all  transactions  where  cash  was  received  or  paid 
to  see  that  each  has  a  correct  entry  in  the  journal.  Also  determine  it'  tlie  projjer  amount  of  money  has  been 
paid  out  by  going  through  the  transactions  in  the  te.vt-book,  finding  the  sum  of  all  cash  to  be  paid,  and  compar- 
ing this  amount  with  the  total  aish  in  the  "  Cash  Paid  Out "  envelope. 

Count  and  add  the  debits  of  nierchandi.se  in  the  journal,  and  write  the  number  and  the 
sum  in  the  proper  columns  ojaposite  Mircliaiuiisc  Purcltascs  on  the  report.  Count  and  add 
the  credits  of  merchandise  in  the  journal,  and  write  the  number  and  the  amount  opposite 
Merchandise  Sales  on  the  rejjort. 

These  are  all  the  results  required  in  the  first  report.  You  will  now  present  the  report 
to  your  teacher,  with  your  journal,  and  the  "  X'ouchers  for  Others  "  and  "  Cash  Paid  Out " 
envelopes.  E.xamine  every  voucher  carefully  to  see  that  it  is  correctly  made  and  checked, 
as  well  as  neatly  written.  Poor  work  will  not  be  accepted,  and  you  would  waste  time  to 
hand  it  in.  Rewrite  all  work  that  is  not  your  best  before  presenting  it  for  inspection.  If 
your  report  is  correct,  your  teacher  will  O.K.  it,  after  which  you  should  place  it  in  your 
Voucher  File. 

No.  11.  —  Ai'Kii,  5.  Mr.  Hastings  has  decided  to  open  a  bank  account  and  has  selected 
the  Commercial  l^ank  of  your  city  as  the  institution  with  which  to  do  business.  Deposit 
S  5000  in  that  bank. 

Method  of  Opening  a  Bank  Account.  —  If  the  person  who  wishes  to  open  a  bank  account 
is  not  acquainted  with  the  officers  of  the  bank,  he  should  get  some  one  to  introduce  him. 
At  the  time  of  the  introduction  the  cashier  takes  the  depositor's  signature  in  a  signature 
book  or  on  a  card.  The  following  represents  a  signature  card  on  which  a  person  has 
signed  as  attorney. 

Form  of  Sion.vture  C.-\rd 


R 


-^/■'^■-^^. 


<iZC:^y. 


Bv  Whom  Introdcccd 


In  this  instance  you  represent  Mr.  Hastings,  and  he  has  given  you  a  power  of  attor- 
ney to  sign  his  name.  Take  the  power  of  attorney  (No.  A)  from  your  Voucher  File, 
and  read  it  carefully.  Next  detach  the  blank  card  (No.  11)  from  your  incoming  voucher 
pad,  and  write  on  it  the  name  of  J.  M.  Hastings  and  your  name,  according  to  the  form 
shown  above.  You  should  write  the  signature  on  the  card  in  the  exact  manner  in  which 
you  intend  to  write  it  on  checks.  Take  the  power  of  attorney  and  the  card  to  the  bank. 
In  case  there  is  no  regular  bank  in  the  school,  your  teacher  will  receive  your  signature 


THE   CHECK    BOOK  — APRIL 


59 


card  and  transact  with  you  the  business  of  the  bank  I'"orm  of   Deposit  Ticket 

(or  will  assign  some  other  student  to  transact   it). 
Replace  the  power  of  attorney  in  your  file. 

The  Deposit  Ticket.  — Make  out  a  deposit  ticket 
for  $5000,  according  to  the  illustration  herewith  (of 
course  filling  in  also  the  current  year). 

In  making  out  a  deposit  ticket  hereafter,  always  list 
bills,  specie,  and  checks  separately.  Each  check  should 
be  ?et  down  as  a  separate  and  distinct  item.  If  the 
check  is  on  a  local  bank,  give  the  name  of  the  bank. 
If  on  an  out-of-town  bank,  give  the  name  of  the  town. 

Write  your  own  name  and  price-list  number  on 
the  deposit  ticket,  near  the  bottom.  This  is  only 
for  the  convenience  of  the  teacher  in  identifying 
3^our  ticket,  and  would  not  be  done  in  business. 

Count  out  $5000  in  cash  from  the  Cash  Drawer 
and  take  the  money,  deposit  ticket,  and  bank  pass 
book  to  the  bank  and  present  them  to  the  teller, 
who  will  receive  the  cash  and  give  you  credit  for 
the  amount,  by  entering  it  upon  the  left-hand  page 
of  the  bank  pass  book,  with  the  date  and  his  initials. 
(If  the  school  has  no  regular  bank,  go  to  your 
teacher,  who  will  make  the  teller's  entry,  or  will 
have  some  other  student  make  it.) 

Make  a  record  of  the  deposit  on  the  stub  of  your  check  book  according  to  the  following 
form,  filling  in  the  current  year  after  the  date  Apr.  j. 

Form  of  Stub  and  Chfxk 


DEPOSITED   BY 

^          IN  \                            \ 

Commercial  Bank 

1 

iL^#ES^Eitf3t EASMCHfeGK  Sf f A«ATt LY     .  ',  1 

Bilh 

Dollars 

Centa 

Check 

11 

11 

n 

•n 

y* 

•» 

*» 

VI 

Dcpaittd . 


CZ^.. 


O'dfT  of 


Am^n:  0/  Httl,        S  _ 
Dtuo^n %  t- 


Make  no  journal  entry  for  this  transaction.  The  $5000  has  not  left  the  business,  but 
has  been  placed  in  the  bank  for  safe  keeping  and  is  still  at  your  disposal. 

No.  12.  —  April   5.     Sell  Chas.  E.  Hayes  merchandise  on  account,  as  requested. 

Select  the  goods  from  the  Store  Room  and  check  each  item  on  the  order  as  soon  as 
filled.  Make  out  the  bill  from  your  price-list,  but  do  not  receipt  it.  Verify  your  calcula- 
tions and  make  your  journal  entry.     (Review  rule  10,  page  23.) 

In  filling  orders  be  sure  that  the  proper  merchandise  cards  accompany  each  bill.  LInless  you  are  careful  in 
this  respect,  you  will  not  have  the  riglit  quantity  of  merchandise  on  hand  when  you  take  your  inventory  at  the 
end  of  the  month.  If  you  have  followed  directions,  the  cards  in  your  Store  Room  will  then  agree  with  the 
quantity  of  merchandise  on  hand. 


60  MODERN   ILLUSTRATIVE   BOOKKEEI'ING 

Place  the  merchandise  and  the  bill  in  the  envelope  entitled  "  Vouchers  for  Others." 
Fold  the  order  lengthwise,  face  outward,  and  write  FilUd,  with  the  date,  across  the  face. 
Place  the  order  in  the  Voucher  File. 

No.  13. — April  6.  This  order  calls  for  merchandise  to  be  sold  to  Ellis  &  Rand,  on 
account. 

Select  the  goods  and  check  each  item  upon  the  order  as  filled.  Do  all  the  other  things 
necessary,  as  you  did  for  transaction  No.  12. 

No.  14. — April  8.  This  invoice  of  merchandise  has  been  purchased  from  Smith  & 
Dorothy,  on  account. 

When  terms  are  not  mentioned,  it  is  understood  that  the  purchase  is  on  account.  Pro- 
ceed as  with  transaction  No.  9. 

N  B.  —  The  .student  must  use  great  care  in  checking  up  nil  invoices,  both  as  to  quantity  of  goods  bought 
and  as  to  calculations.  If  he  finds  any  errors,  he  must  not  correct  them  himself,  but  should  report  the  matter  to 
his  teacher,  who  will  make  any  necessary  corrections  (or  instruct  some  student  to  make  them). 

No.  15.  — Apkii.  8.  You  have  received  $300  cash  in  part  payment  of  bill  sold  to  Chas. 
E.  Hayes  on  the  5th  in.st. 

Count  the  cash,  and  if  it  is  correct,  write  a  receipt  for  the  amount,  using  voucher  No.  2 
as  model.  Place  the  cash  in  your  Casli  Drawer  and  the  receipt  in  Vouchers  for  Others. 
Make  proper  entry  in  your  journal-daybook.     (Review  rule  1 1,  page  24.) 

No.  16. — April  g.     Pay  Hatheway  &  Reynolds  $400  in  cash. 

Take  the  cash  from  your  Cash  Drawer  and  place  it  in  the  "  Cash  Paid  Out "  envelope, 
taking  a  receipt  (No.  16)  for  the  amount.  Place  the  receipt  in  your  Voucher  File.  Make 
proper  entry  in  your  journal-daybook.     (Review  rule  12,  page  24.) 

N.B.  —  Hereafter  the  student  must  alw.iys  make  the  proper  journal  entry  without  being  so  instructed  in 
each  case.  He  must  also  do  all  other  things  called  for  by  the  transaction,  as  in  previous  cases,  even  if  they,  or 
some  of  them,  are  not  specially  mentioned. 

No.  17.  — April  10.     Bought  merchandise  on  account  from  Geo.  C.  Cary. 

Examine  the  merchandise  and  see  that  it  corresponds  with  the  quantities  called  for  in 
the  invoice.  Check  each  item,  verify  the  calculations,  and  O.K.  the  bill  if  everything  is 
correct.  (What  should  you  do  if  anything  is  wrong  ?)  What  else  should  you  do  with  the 
bill .'     (Compare  with  transaction  No.  9.) 

No.  18.  — -April  10.  This  note  has  been  received  from  Ellis  &  Rand  in  part  payment 
for  transaction  No.  1 3. 

E.xamine  the  note  carefully.  Who  promises  to  pay  the  note.'  Who  should  receive 
credit  for  this  note.''  (Review  rule  15,  page  28,  and  rule  ii,  page  24.)  Place  the  note  in 
your  Cash  Drawer  and  keep  it  there  until  it  is  disposed  of  or  paid. 

Notes  are  not  cash,  but  are  kept  in  the  Cash  Drawer  for  convenience  only. 

No.  19.  — April  i  i.     Sell  Chas.  E.  Hayes  merchandise  as  ordered. 
Select  the  merchandise  from  the  Store  Room  and  make  out  the  bill.     Verify  your  calcu- 
lations.    Place  the  bill  and  the  merchandise  in  Vouchers  for  Others. 

No.  20.  — April  12.     l^oiight  merchandise  from  L.  A.  Wright  &  Co.  on  account. 
Check  each  item  on  the  bill  as  you  compare  the  merchandise  with  the  items,  and  verify 
the  calculations.     If  the  bill  is  correct,  O.K.  it.     Place  the  merchandise  in  the  Store  Room. 


BUSINESS  PRACTICE  — APRIL  61 

No.  21. — April  14.  Give  L.  A.  Wright  &  Co.  Mr.  Hastings's  note  for  $400,  at  10 
days,  on  account. 

Make  out  a  note,  using  Voucher  No.  iS  as  model;  also  see  form  of  note,  transaction 
No.  54,  page  29.  (Review  rule  12,  page  24,  and  rule  16,  page  29.)  Place  this  note  in  the 
envelope  entitled  "  Bills  Payable  File,"  which  you  will  find  in  your  package  of  Business 
Forms.  Do  not  lose  the  contents  of  this  envelope,  as  you  will  be  required  to  take  from  it 
each  note  or  bill  payable  when  it  becomes  due. 

No.  22.  — April  14.     Fill  this  order  from  Ellis  &  Rand,  on  account. 
Select  the  goods   and   make  out  the  bill.     Do  not  forget  to   place  all   bills  to  others, 
with  goods  sold,  in  Vouchers  for  Others. 

No.  23.  — April  16.     Chas.  E.  Hayes  has  given  his  check  to  apply  on  account. 

The  check  is  regarded  as  cash,  because  it  can  be  converted  into  cash  at  once  by  present- 
ing it  at  the  bank.  Examine  the  check  carefully  to  see  that  it  is  properly  dated,  filled  out, 
and  signed.     Place  the  check  in  your  Cash  Drawer  and  count  it  as  part  of  your  cash. 

A  check  is  an  order  written  by  a  depositor,  requesting  the  b:iiik  in  which  he  has  money  deposited  to  pay  a 
certain  amount  to  some  person  named,  or  to  his  order,  upon  presentation  of  the  check.  The  bank  will  require 
the  person  named  to  be  identified,  if  he  is  not  personally  known,  and  will  also  require  him  to  indorse  the  check  ; 
that  is,  write  his  name  across  the  back  at  the  left  end  of  the  check  about  one  and  one  half  inches  down  from  the 
end. 

All  checks  received  in  business  each  day  should  be  deposited  the  same  day  or  the  day  following,  because  of 
the  possibility  that  either  the  bank  or  the  maker  of  the  check  may  fail.  In  the  student's  work  for  this  and  the 
following  month,  however,  deposits  are  made  at  longer  intervals,  in  order  to  simplify  the  entries  in  the  check 
book  and  to  give  practice  with  deposit  tickets  containing  a  number  of  different  items. 

No.  24. — April  16.  SECOND  REPORT.  Find  the  cash  balance  on  your  previous 
report  and  write  the  amount  on  your  report  blank  opposite  Casli  Balance,  Last  Report. 
Find  the  sum  of  all  cash  debits  in  the  journal  since  the  previous  report  was  made  out,  and 
write  the  amount  opposite  CasJi  Received.  Find  the  sum  of  all  cash  credits  during  the  same 
period  and  enter  it  opposite  Cash  Paid  Out. 

Add  the  cash  balance,  last  report,  to  the  cash  received  since,  and  from  the  sum  subtract 
the  cash  paid  out.     The  remainder  should  be  entered  opposite  Casli  on  Hand. 

To  prove  the  work,  count  the  money  in  the  Cash  Drawer  and  write  the  amount  on  the 
report  opposite  Cash  in  Drawer.  But  $  5000  of  your  money  is  in  the  bank,  as  shown  by  the 
stub  of  your  check  book.  Write  this  amount  opposite  Cash  in  Bank  on  your  report.  Add 
the  amount  In  Drawer  and  In  Bank.  The  sum  represents  the  total  cash  on  hand  and 
should  be  the  same  as  Casli  on  Hand  on  your  report  as  determined  from  your  journal 
record  of  cash  debits  and  credits.  If  this  is  the  case  your  cash  is  in  balance.  If  not,  your 
cash  is  out  of  balance,  and  you  must  go  over  your  work  until  you  find  the  error. 

Fi  id  from  your  journal,  and  enter  on  the  report,  the  number  and  total  amount  of  mer- 
chandise purchases  and  of  merchandise  sales  since  the  preceding  report ;  also  the  number 
and  amount  of  notes  issued  by  the  business.  The  latter  will  be  found  by  taking  from  the 
journal  the  credits  of  Bills  Payable,  which  should  correspond  with  the  bills  payable  in  your 
envelope  entitled  "  Bills  Payable  File." 

Examine  your  vouchers  to  see  that  they  are  correct  in  every  respect.  Hand  the  report, 
with  your  journal,  Cash  Paid  Out,  and  Vouchers  for  Others,  to  your  teacher. 

No.  25.  ^  April  17.     Give  Geo.  C-  Gary  a  check  for  $300,  to  apply  on  account. 

Open  your  check  book  and  fill  out  the  stub  as  shown  in  the  form  of  check-book  stub 


62 


MODERN   ILLUSTRATIVE  BOOKKEEPING 


Chfxk  SxrB  Filled  Out 


n,fu,„i,^    /C/\^2^^  -r-  ,j, 


herewith,  filling  in  the  current  year.  This  is  the 
original  entry  of  the  transaction,  and  should  be 
made  before  the  check  is  written.  The  line  stat- 
ing what  the  check  is  for  should  always  be  filled 
out. 

Write  the  check  according  to  the  form  below, 
filling  in  also  the  name  of  your  city  or  place,  and  the 
current  year. 

In  filling  out  a  check  be  sure  to  write  the  amount  in  figures 
close  to  the  dollar  sign,  and  to  begin  writing  the  amount  in 
words  at  the  extreme  left-hand  end,  as  shown  in  the  model, 
filling  up  tlie  blank  space  after  the  amount  with  a  waved  line. 
Failure  to  observe  these  instructions  may  render  the  maker  of  a 
check  liable,  in  case  the  amount  of  the  check  should  be  raised 
by  any  dishonest  person  into  whose  hands  it  might  happen  to 
fall.  Sign  the  check  in  the  same  manner  as  that  in  which  you 
wrote  J.  M.  Hastings's  name  upon  the"  signature  card. 
You  will  notice  that  the  following  check  is  made  payable  to  order.  When  a  check  is  so  written,  the  holder 
must  indorse  it  before  obtaining  money  for  it,  or  before  transferring  it  to  another  person.  If  a  check  is  made 
payable  to  bearer,  it  is  transferable  upon  delivery  without  indorsement.  Most  banks  require  all  checks  to  be 
indorsed  before  tliey  will  cash  them.  This  is  not  necessary  if  the  check  is  payable  to  bearer,  but  the  indorse- 
ment affords  a  means  of  identification  should  any  dispute  arise  as  to  who  obtained  the  money. 


Depoiittd 


(Your  place  bere.) 


^^^y^  /-r,    /^ '/u^.^L, 


ny/z/'eraac/ 


/  ^o.^ 


'€/ 


T^-g?^^^^ 


i. 


iZJ^^^ 


^U/mf^ 


Remove  the  check  from  the  check  book  and  place  it  in  the  Cish  Paid  Out  envelope. 
Subtract  the  amount  of  the  check  from  the  amount  in  the  bank,  and  bring  down  the  bal- 
ance, as  shown  in  the  stub  above  Geo.  C.  Gary  will  present  tiiis  check  at  the  bank, 
and  when  the  bank  pays  it,  the  check  will  be  charged  to  J.  M.  Hastings's  account  and 
deducted  from  the  deposit  he  has  made. 

In  order  to  make  the  check  book  agree  with  the  bank  account,  you  must  subtract  all 
checks  when  given  and  add  all  deposits  when  made.  Errors  in  the  check  book  are  very 
easily  made,  and  you  must  use  the  utmost  care  to  prevent  their  occurrence. 

This  is  check  No.  i.  Number  the  next  check  and  stub  2,  the  next  3,  and  so  on  con- 
secutively to  the  end  of  the  check  book.     Do  this  now,  using  red  ink  for  the  purpose. 

In  your  journal  entry  the  account  to 'be  credited  \%  CasJi. 

No.  26.  — April  19.     Fill  the  order  of  T.  W.  Rowen  &  Co.  on  account. 

Select  the  merchandise  called  for,  checking  each  item  on  the  order  as  filled.  Make  out 
the  bill  and  verify  your  calculations.     Place  the  goods  and  bill  in  Vouchers  for  Others. 


THE  CHECK   BOOK 


APRIL 


63 


No.  27.  —  April  20.  This  check  has  been  received  from  T.  W.  Bowen  &  Co.,  to  apply 
on  account. 

This  check  (No.  27)  is  in  part  payment  of  No.  26.  What  account  should  bo  debited  ? 
Why .''    What  account  should  receive  credit  .■"    Why  .■•    Place  the  check  in  your  Cash  Drawer. 

No.  28.  —  April  20.  Ellis  &  Rand's  note,  dated  Apr.  10,  is  due  to-day,  and  they  have 
sent  a  check  for  the  amount. 

See  that  the  check  is  properly  filled  out,  and  tliat  the  amount  named  in  the  check  agrees 
with  the  amount  of  the  note.  Take  the  note  from  your  Cash  Drawer,  write  Paid,  April  20, 
J.  J\I.  Hasti)igs,  by,  and  your  own  name  as  Atty.,  in  red  ink,  across  its  face,  and  place  it  in 
Vouchers  for  Others.     Place  the  check  in  the  Cash  Drawer.     (Review  rule  i",  page  30.) 

No.  29. — April  20.  Write  a  thirty-day  note  in  favor  of  Geo.  C.  Cary  for  the  balance 
due  him. 

Determine  the  balance  due  Cary  by  examining  all  entries  to  his  account  in  the  journal ; 
be  sure  that  you  get  the  right  amount.  Make  the  note  payable  at  your  office.  Proceed  as 
you  did  with  transaction  No.  21  on  page  61. 

No.  30.  — April  23.     Bought  merchandise  from  Grunsfeld  Bros,  on  account. 
Compare  the  bill  received  and  check  the  items.     Store  the  merchandise.      Make  proper 
journal  entry  and  place  the  bill  in  the  Invoice  File. 

No.  31.  —  April  23.     Pay  Grunsfeld  Bros.,  by  check,  $200  on  account. 

Fill  out  the  stub  of  the  check  and  deduct  the  amount  from  the  balance  in  bank  as  shown 
on  the  stub.  The  illustration  herewith  represents  the  face  of  the  stub  of  your  check 
book  properly  filled  out  to  date. 

Fill  out  the  check  in  favor  of  Grunsfeld  Bros., 
remove  it  from  the  check  book,  and  place  in  Cash 
Paid  Out.  Transfer  the  balance  in  bank,  after  de- 
ducting this  check,  to  the  face  of  the  next  stub,  writ- 
ing the  amount,  $4500,  at  the  top  of  the  money 
column  opposite  the  space  above  the  deposit  line. 
Write  Ford,  before  the  amount  at  the  bottom  of  the 
first  page  of  stubs,  and  Brot.  Ford,  before  the  same 
amount  at  the  top  of  the  ne.xt  page  of  stubs ;  do  the 
same  on  later  pages. 


Check  Stub  Filled  Out 


No.  32.  — April  24.  The  note  (No.  21)  in  favor 
of  L.  A.  Wright  &  Co.,  dated  April  14th,  is  due  to-day ; 
pay  it  with  a  check. 

Fill  out  the  stub  of  your  check  book,  and  deduct 
the  amount  from  the  balance  in  bank ;  then  fill  out 
the  check,  remove  it  from  your  check  book,  and  place 
it  in  your  Cash  Paid  Out.  Receive  the  note  from 
L.  A.  Wright  &  Co.  by  removing  it  from  the  envelope 
entitled  "  Bills  Payable  File."  Write  Paid,  April 24, 
and  the  current  year,  in  red  ink,  across  the  face  of 
the  note,  and  ask  your  teacher  to  sign  L.  A.  Wright 
&  Co.'s  name.  Place  the  canceled  note  in  your 
Voucher  File.     (Review  rule  18,  page  30.) 


Date  . 


/^-A^^ 


-^-^^IV 


Order  of 

ForlH^ 


-f:?^ 


Amount  of  Htll, 
Discount # 


Deposited  . 


No.     Z,  , 


3  ao 


'^71^1? 


Date 
Order  of 


/17.^^    -2,  i*     ,n    


^■^^^y^.^iJI'.xy-^-^ 


-r~T7^ 


.a^ 


'^y^2^£.^£. 


-^ 


Amount  of  IhU, 
Discount <6 


'':^^-^-'^~sc^ 


ZOO 


^J'OO 


64 


MODERN  ILLUSTRATIVE   BOOKKEEPING 


No.  33.  —  Apkil  35.     Purchased  merchandise  from  Bernet  &  Craft,  on  account. 
Compare  the  merchandise  received  with  the  bill  and  check  each  of  the  items.     Store  the 
merchandise.     Place  the  bill  in  the  Invoice  File. 

No.  34.  —  April  26.     Fill  the  order  of  H.  A.  Woodbury,  on  account. 
Select  the  merchandise  called  for  and  check  the  items  on  the  order.     Make  out  the  bill  and 
verify  your  calculations.      Place  the  bill,  merchandise,  and  order  in  the  proper  receptacles. 

No.  35.  —  April  27.  J.  M.  Hastings  requires  $75  for  his  own  use,  and  he  draws  the 
amount  from  the  business  by  check. 

Fill  out  the  stub  of  your  check  book,  then  make  the  check  and  deduct  the  amount  from 
the  balance  in  the  bank,  as  shown  on  the  stub  of  your  check  book.  Remove  the  check  and 
place  it  in  Cash  Paid  Out.     Determine  the  debit  by  rule  14,  page  27. 

When  money  is  drawn  for  private  use.  the  clicck  should  be  made  payable  to  the  proprietor's  name.  If  the 
cash  were  drawn  for  use  in  the  business,  the  check  should  read.  Pay  to  the  order  of  Cash. 

No.  36.  —  .\PKIL  28.      Sell  merchandise  to  T.  W.  Bowen  &  Co.,  as  ordered. 
Proceed  as  with  other  such  orders. 

No.  S7.  —  April  30.     Pay  drayage  bill  with  check. 

p'ill  out  the  stub,  write  the  check,  and  deduct  the  amount  from  the  bank  balance.  (This 
transaction  is  similar  to  No.  42,  page  26.)     Place  the  check  in  Cash  Paid  Out. 

No.  38.  —  April  30.     T.  \V.  Bowen  &  Co.  have  given  their  note  to  apply  on  account. 
Determine  the  debit  by  rule  15,  page  28.       Place  the  note  in  your  Cash  Drawer. 

No.  39,  —  April  30.     Sell  merchandise  to  H.  A.  Woodbury,  as  ordered. 

No.  40.  —  Apkil  30.  Mr.  Hastings  hands  you  $60  in  currenc)',  the  amount  of  your 
salary. 

Take  this  amount  of  money  from  the  cash  drawer,  and  retain  it  in  your  personal  posses- 
sion. 

Form  of  Chkck,  Indorsed 


THE  CHECK   BOOK  — APRIL 


65 


Form  of  Deposit  Ticket 


DEPOSITED   BY 


No.  41.  —April  30.  Take  from  your  Cash  Drawer  all  currency  and  all  checks  payable 
to  the  order  of  J.  M.  Hasting.s.  Leave  the  notes  payable  to  his  order  in  the  Cash  Drawer. 
Tlicy  are  not  cash.  Indorse  the  checks,  by  writing 
across  the  back,  about  one  and  one-half  inches 
down  from  the  left  end  of  the  check.  Pay  to  the 
order  of  Commercial  Bank,  J.  M.  Hastings,  by 
(Student's   Name),  Atty.     (See  form  on  page  64.) 

On  a  blank  deposit  ticket  write  opposite  the  word 
Bills  the  amount  of  bills  in  your  Cash  Drawer; 
opposite  the  word  Specie  the  amount  of  your  frac- 
tional currency  (one-cent  to  fifty-cent  pieces,  inclu- 
sive); and  on  the  following  lines  the  amount  of 
each  individual  check  separately.  To  the  left  of 
the  amount  of  each  check,  write  the  name  of  the 
bank  on  which  the  check  is  drawn,  provided  it  is  a 
local  bank.  If  the  check  is  on  an  out-of-town  bank, 
write  the  name  of  the  town. 


Specie  includes  gold,  silver,  nickel,  and  copper  coin.  In 
making  out  your  deposit  tickets  treat  your  fractional  currency 
as  specie. 

The  accompanying  illustration  represents  a  de- 
posit ticket  properly  filled  out. 

Remember  to  write  your  own  name  and  price- 
list  number  near  the  bottom  of  deposit  tickets. 

Enter  the  details  of  your  deposit  (date,  items, 
and  amounts)  on  the  back  of  a  stub  in  your  check 
book,  using  the  left-hand  page  that  is  opposite  the  ne.xt  check  that  is, to  be  filled  out,  as 
illustrated  in  the  form  below. 

Now  take  your  deposit  ticket,  currency,  checks,  and  bank  pass  book  to  the  bank,  or  to 
your  teacher,  and  the  amount  of  your  deposit  will  be  placed  to  your  credit  in  your  bank 
pass  book.  After  this  has  been  done,  you  should  enter  the  amount  on  the  right-hand  stub 
of  your  check  book  on  the  first  deposit  line  following  the  last  check  written  out.  Add  the 
amount  of  the  deposit  to  the  previous  balance,  as  illustrated  below. 


Commercial  Bank 


Dollars 


Bills. 
Specie... 


rif/rh    'W.^r^-T^l^.J.  . 


\9 /o^-  00 


2-2.^^^-0 


'  /^'. 


2-0  l'^ 


^  /  / 


Cents 


-?   a 


£1^ 


£1^ 


A- 


/<?- 

JO 

BO/j 

JOJ^ 

ao 

/7s 

zo 

c-i^ii^-oeL^ 

Z06 

'f<s 

^// 

S-J 

Dale 

Order  of 


Fcr_ 


Amoufit  of  BilU 
DtKounl ■* 


No.  42.  —  April  30.  THIRD  REPORT.  Prepare  your  report  blank,  showing  cash 
received,  cash  paid  out,  cash  on  hand  in  the  Commercial  Bank,  merchandise  purchases  and 
sales,  and  such  other  results  as  are  called  for  on  the  report  blank.     Hand  the  report,  to- 


6G  MODERN  ILLUSTRATIVE  BOOKKEEPING 

gether  with  your  vouchers  and  journal-daybook,  to  your  teacher.     Leave  your  bank  pass  book 
at  the  bank,  or  with  your  teacher,  to  be  balanced. 

Comparing  Pass  Book  with  Stub  of  Check  Book.  —  It  is  customary  to  leave  the  pass  book  at  the  bank  at 
least  once  a  month  to  l)e  balanced.  After  the  book  has  been  written  up,  the  bank  will  return  it  to  you  with  your 
checks  that  have  been  paid  by  the  bank  to  date.  The  bookkeejjer  should  compare  the  pass  book  and  canceled 
checks  with  the  stub  of  the  check  book.  If  all  the  checks  issued  were  presented  at  the  bank  and  paid  before 
the  pass  book  was  written  up,  then  the  bank  balance  as  shown  in  the  pass  book  should  agree  with  the  bal- 
ance as  shown  on  the  stub  of  the  check  book.  However,  if  some  of  the  checks  issued  have  not  been  paid  bv  the 
bank  up  to  the  time  the  pass  l)ook  was  balanced,  their  amount  must  be  deducted  from  the  balance  sliown  in 
the  p;iss  book  to  make  it  agree  with  the  real  bank  balance  as  shown  on  the  stub  of  the  check  book. 

POSTING 

No.  43.  —  In  your  ledger,  at  the  top  of  page  9,  or  the  first  right-hand  blank  page  after 
your  previous  ledger,  write  y.  jlf.  Hastin^^s ;  15  lines  below  write  Merchandise.  At  the  top 
of  page  ID  write  Expense,  and  15  lines  below  write  Loss  and  Gain. 

These  accounts  make  a  section  of  the  ledger  containing  all  the  business  accounts  (see 
page  34),  or  accounts  showing  losses  or  gains;  the  Loss  and  Gain  account,  where  these 
gains  and  losses  are  gathered  under  one  head  (see  page  38);  and  the  account  of  the 
Proprietor,  who  receives  the  gain  from  the  business  or  sustains  the  loss,  should  there  be  one. 

On  page  1 1  of  your  ledger,  at  the  top,  write  Cash ;  18  lines  below  write  Chas.  E.  Hayes ; 
and  15  lines  below  this  write  Ellis  &■  Rand.  At  the  top  of  page  12  write  T.  W.  Boivcn  &■ 
Co.;   15  lines  below  write  //.  A.  Woodbury ;  and  15  lines  below  this  write  Bills  Receivable. 

These  accounts  make  a  section  of  your  ledger  containing  finance  accounts  (see  page  35) 
which  show  in  their  balances  resources  of  the  business.  In  large  business  houses  accounts 
with  persons  owing  the  business  are  generally  kept  in  a  separate  ledger,  called  the  "  Cus- 
tomers' Ledger,"  "Sales  Ledger,"  or  "Accounts  Receivable  Ledger." 

At  the  top  of  page  1 3  write  Hatheway  &  Reynolds  ;  1 5  lines  below  write  Smith  &  Dorothy ; 
and  15  lines  below  this  write  Geo.  C.  Gary.  At  the  top  of  page  14  write  L.  A.  Wright  &■  Co.; 
15  lines  below  write  Grinisfeld  Bros.;  15  lines  below  tliis  write  Bernet  &  Craft;  at  the  top 
of  page  15  write  Bills  Payable. 

This  third  section  of  your  ledger  will  contain  finance  accounts  which  show  in  their 
balances  a  liability  of  the  business. 

Be  sure  to  insert  in  your  lodger  the  projicr  addresses  for  all  personal  accounts,  as  shown 
by  your  vouchers. 

In  business  it  is,  of  course,  not  practicable  to  write  the  names  of  all  ledger  accounts  before  p>osting.  and  they 
are  opened  in  the  ledger  in  the  order  in  wliich  they  appear  in  the  journal;  but  separate  sections  of  the  ledger 
should  be  taken  for  each  class  of  accounts. 

No.  44.  —  Post  your  journal  entries  (see  directions,  pages  13-17).  Check  buck  your 
postings  (see  directions,  page  25).  Rule  off  each  account,  or  portion  of  an  account,  which 
balances  (see  page  26).     Take  a  trial  balance  of  ledger  balances  and  submit  to  your  teacher. 

If  the  trial  balance  is  correct,  take  an  inventory  of  your  merchandise  from  the  cards 
foimd  in  your  Store  Room.  You  should  have  on  hand  305  brls.  apples,  200  brls.  flour, 
25  bu.  barley,  675  bu.  corn,  800  bu.  oats,  1025  bu.  jiotatoes.  If  you  have  this  quantity  of 
goods  in  your  Store  Room,  find  the  value  at  the  latest  cost  price  as  shown  on  your  latest 
invoices.  Submit  the  result  to  your  teacher,  and  if  it  is  correct,  copy  the  inventory  in  your 
Blank  No.  i,  as  you  did  the  one  on  page  34. 

Then  make  statements  according  to  forms  on  pages  35  and  36. 

After  the  statements  are  approved,  close  the  ledger  (see  directions,  pages  37-44). 


STATF.MEXTS  OI-"  ACCOUNTS 


07 


STATEMENTS  OF  CUSTOMERS'  ACCOUNTS 

An  important  part  of  any  bookkeeper's  work  is  that  attention  to  customers'  accounts 
which  insures  prompt  payment  of  bills  as  they  fall  due.  In  order  to  call  the  attention  of 
customers  to  the  fact  that  pa\-ment 


is  desired,   many   business   houses 
send  a  statement  whenever  a  bill 
is  due ;    r.g:,  if  John  Smith  &  Co. 
bought  merchandise  billed  at  $  165, 
lanuary  loth,  at  ten  days,  then  on 

January  20th,  or  perhaps  a  day  or 

two  later,  a  statement  like  the  upper 

one  on  this  page  would  be  sent  him. 

In  the  ordinary  course  of  busi- 

TO 

ness,  however,  it  is  a  more  common 
practice  to  send  each  customer,  at 

/? 

■">  "osE              /  fp  ,-ry!-^^^^-^^ 

/^.^ 

y 

the  first  of  the  month,  a  statement 

showing    the  debit  balance  of  his 

account    up  to  date,  whether  this 

balance  is  due  or  not,  thus  calling 

Statement 

POLIO  l3 

y/7^^v  /.ifl 

'„t\"  "J.   M.   HASTINGS 

146    ELM    STREET 

^fy/l^y 

.-r 

^/^T^^^^^ 

4/.<-^ 

.-T^ 

1 

/  / 

arr 

/UUy 

^rn 

his   attention  to  his  indebtedness 

-i^^y. 

and  enabling  him  to  compare  the 

Of^^y 

r 

/V3-7V  ~6i^r:)  .A^^ 

,-?/9^ 

statement  with  the  account  in  his 

/^ 

^■TfJO 

rr^^y 

ledger,   and    note    any  difference 

y 

^^-r 

.i-f? 

which    may  appear    between    his 
books  and  the  statement.     See  the 

second  form  of  statement  on  this 

page,  and  the  statement  on  the  fol- 
lowing page. 

A  competent  bookkeeper  will 
have  his  statements  ready  to  send 
out  on  or  soon  after  the  first  of  the 
month,  as  most  of   them  can  be 
prepared  considerably  in  advance 

of  that  date. 

! 

Customers  statements  are  pre- 

68 


MODERN   ILLUSTRATIVE   BOOKKEEPING 


pared  entirely  from  the  ledger  accounts,  and  of  course  the  posting  must  be  completed  before 
the  statements  can  be  made  out. 

No,  45.  — You  may  now  prepare  statements  of  accounts  for  all  customers  who  owe  you 
a  balance. 

Turn  to  Chas.  E.  Hayes's  account  in  your  led<;er,  and  from  it  prepare  a  statement  like 
the  second  form  given  on  page  67,  writing  also,  of  course,  your  place  and  the  current  year. 
Study  the  form  carefully,  in  all  its  details.  The  debits  in  the  form  are  not  your  debit 
amounts. 

Prepare  similar  statements  for  all  others  who  owe  you  a  balance.  Place  them  in  properly 
addressed  envelopes  and  hand  to  your  teacher. 

Take  note  that  the  first  column  in  a  statement  is  an  item  column  and  is  to  be  used  only  when  there  are  two 
or  more  debit  or  credit  items.      When  a  statement  has  only  one  debit  or  credit  item,  enter  it  in  the  second  column 

only. 

The  following  illustrates  a  form  of  statement  required  when  an  account  has  a  debit  bal- 
ance at  the  beginning  of  the  month  for  which  the  statement  is  made. 

Ciphers  in  the  Cents  Column.  — 
When  the  amount  to  be  written,  either 
in  a  statement  or  in  a  book,  consists  of 
an  even  number  of  dollars,  some  book- 
keepers write  two  ciphers  in  the  cents 
column,  while  others  place  a  dash  in 
that  column.  Both  of  these  methods 
waste  time  without  accomplishing  any 
good,  and  the  latter  tends  to  destroy 
neatness,  because  of  variation  in  the 
length,  form,  and  position  of  the  da.sli. 
The  best  method  to  pursue  when  there 
are  no  cents  is  to  leave  the  cents  column 
blank,  as  shown  in  the  preceding  models 
and  in  the  form  of  statement  on  this 
page- 
No.  46.  —  Present  your  books  to 
your  teacher  for  inspection,  after 
having  carefully  examined  them 
yourself  to  see  that  all  rulings  are 
correct  and  that  page  marks, 
dates,  and  transfer  pages  have 
not  been  omitted.  See  that  all 
closing  entries  and  rulings  in  your 
ledger  are  in  red  ink,  and  that  all 
transfers  are   in   black  ink. 

Do  not  allow  yourself  to  be  care- 
less in  these  small  matters;  they 
are  more  important  than  they  ap- 
pear. In  your  small  ledger  it  is  an 
easy  matter  to  find  an  account,  even  if  the  page  mark  is  ni)t  in  the  journal,  but  in  business 
where  the  ledger  sometimes  has  lOOO  pages  the  omission  of  page  marks  causes  much 
unnecessary  work. 


Polio C2 

Statement 

,<r,  ■?,  ?  //^^^^^^ y^yiA 

IN 

WI 

tV°  'J.   M.   HASTINGS 

146    ELM    STREET 

/ 

f.  eJ.7 

rfl 

'  fl 

,S:^7:^w^yy 

/  ZS 

/  er 

.?4^2 

SC 

///J" 

J,^y. 

/^^r7^y 

Af 

-^y~^.^-4^y 

r<?o 

_^ 

y 

J  /-J- 

QUESTIONS  — APRIL 


69 


Ai'Riu.  r^KicE  Lists 


i.ys- 

2 

I. So 

3 

1.85 

4 

1.90 

5 

1.9s 

6 

2.00 

7 

1.76 

8 

1. 81 

9 

1.86 

10 

1.91 

11 

1.96 

12 

1-77 

13 

Apples     .     .     . 

1.82 

Barley      .     .     . 

46 

•31 

■36 

•4t 

.46 

.27 

•32 

•37 

.42 

•47 

.28 

•33 

•38 

Cora    .... 

•56 

•30 

•45 

•31 

.46 

•SI 

.40 

■36 

•37 

.50 

.41 

•32 

•47 

Flour  .... 

4-SO 

4-45 

4.40 

4^35 

430 

4.2s 

4.49 

4.44 

4-39 

4^34 

4.29 

4.48 

4^43 

Oats    .... 

.26 

•52 

•37 

•51 

.36 

•31 

.42 

.46 

•45 

•32 

.41 

.50 

•35 

Potatoes  .     .     . 

.28 

•32 

•36 

.40 

•44 

.48 

•39 

•33 

•37 

.41 

•45 

•39 

•  30 

April  Price  Lists  (continued) 


14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

1.84 

24 

1.89 

25 

Apples 

1.87 

1.92 

1.97 

1.78 

1.83 

1.88 

1^93 

1.98 

1.79 

1.94 

Barley 

•43 

.48 

.29 

•34 

•39 

•44 

•49 

•30 

•35 

.40 

•45 

.50 

Corn 

•33 

•43 

•53 

•39 

•49 

•44 

•34 

.48 

•  38 

•52 

.42 

•35 

Flour 

4^38 

4-33 

4.28 

4-47 

4.42 

4-37 

4-32 

4.27 

4.46 

4.41 

4-36 

4-3  ■ 

Oats 

•49 

•39 

.29 

•43 

•33 

•38 

.48 

•34 

•44 

•30 

.40 

•47 

Potatoes 

•34 

•38 

.42 

.46 

.50 

•31 

•35 

■39 

•43 

•47 

•  51 

•54 

QUESTIONS 

1.  What  is  the  object  of  Ijookkeeping?  ' 

2.  What  is  a  power  of  attorney  ?     When  is  it  given? 

3.  How  should  you  proceed  with  a  bill  of  merchandise  received,  before  writing  O.K.  upon  it? 

4.  How  do  you  show  that  the  bill  has  been  carried  to  the  proper  accounts? 

5.  Why  should  merchandise  sold  be  itemized  in  the  journal? 

6.  Why  is  it  unnecessary  to  itemize  merchandise  purchased? 

7.  Why  should  a  receipt  be  taken  when  cash  is  paid  for  any  purpose? 

8.  Is  a  receipted  bill,  or  a  receipt,  proof  that  a  bill  has  been  paid?     Give  your  reasons  for  your  answer 

9.  How  do  you  find  the  amount  of  cash  received  in  making  out  your  reports? 

10.  How  do  you  find  the  amount  of  cash  paid  out? 

11.  How  do  vou  find  the  amount  of  cash  on  hand? 

12.  What  is  a  cash  balance? 

13.  What  is  a  bank? 

14.  Whv  is  it  customarv  for  a  business  house  to  keep  its  money  in  a  bank  instead  of  in  its  own  safe? 

15.  What  is  necessary  to  be  done  before  opening  an  account  with  a  bank? 

16.  How  should  a  signature  be  written  in  the  signature  book  of  a  bank? 

17.  What  is  a  deposit  ticket?     When  and  how  is  it  prepared? 

18.  What  is  a  bank  pass  book,  and  who  makes  the  entries  in  this  book? 
ig.  Where  and  when  should  the  depositor  make  a  record  of  a  deposit? 

20.  Whv  is  no  entrv  required  in  the  journal  wlien  a  deposit  is  made  in  the  bank? 

21.  What  should  be  done  with  an  order  for  merchandise  when  it  is  received? 


TO  MODKRX    ILLUSTRATIVE   BOOKKEEPING 

22.  H')w  would  you  sliow  that  llie  order  had  been  filled,  aud  what  would  you  do  with  it  after  it  had  been 
filled  ? 

2}.  Why  should  orders  for  merchandise  be  carefully  preser\-ed? 

24.  What  is  the  meaning  of  a  purchase  or  a  sale  on  account? 

25.  When  terms  are  not  mentioned  on  an  invoice,  what  is  understood? 

26.  What  is  a  note? 

27.  When  is  a  note  called  a  bill  receivable,  and  when  a  bill  payable?     Why? 

28.  Why  is  a  check  regarded  as  cash? 

29.  Why  should  it  be  presented  immediately  at  the  bank? 

30.  Suppose  you  have  a  check,  how  would  you  get  the  money  called  for  if  you  were  unknown  at  the  bank? 

31.  Why  should  the  stub  of  a  check  book  be  filled  out  before  the  check  itself  is  written? 

32.  What  special  care  should  be  taken  in  filling  out  a  check,  and  what  is  the  consequence  of  carelessness 
in  this  respect  in  case  the  check  is  raised? 

33.  How  is  it  possible  to  determine  at  any  time  what  amount  remains  to  your  credit  in  the  liank? 

34.  When  it  is  necessary  to  dr.iw  a  check  for  private  use,  in  whose  name  should  the  check  be  made  out? 

35.  When  cash  is  checked  out  for  use  in  the  business,  to  whose  order  should  the  check  be  drawn? 

36.  Where  should  tlie  indorsement  of  a  check  appear? 

37.  Define  business  accounts  ;  finance  accounts. 

38.  What  is  a  customer's  ledgtr? 

39.  What  is  the  object  of  checking  back  postings,  and  when  should  it  be  done?  i 

40.  What  is  an  inventory  and  when  is  it  l.^ken? 

41.  What  prices  should  be  used  in  taking  an  inventory? 

42.  Where  are  inventories  carried  in  the  ledger  when  that  book  is  to  he  closed? 

43.  What  is  the  object  of  sending  statements  of  accounts  to  customers,  and  when  is  this  generally  done? 

44.  How  often  should  a  bank  book  be  balanced,  and  who  attends  to  this  work? 

SUPPLEMENTARY    EXERCISE  — No.   2 

The  United  States  Civil  Service  Commission  in  its  examinations  in  bookkeeping  re- 
quires tlie  candidate  to  use  ordinary  foolscap  paper  and  make  all  rulings  required  for  the 
different  books.  Unless  otherwise  directed,  you  may  use  ordinary  foolscap  paper  and  rule 
properly  for  the  journal  and  ledger  on  which  to  make  the  entries  required  in  the  follow- 
ing transactions. 

TRANSACTIONS 

Ai'Kii.  I,  ig  — .  —  Student  commenced  business  this  day,  investing  cash,  $6000. 
Apkil  2.  —  Paid  cash  for  advertising  in  the  daily  paper,  $25. 
April  3.  —  Paid  for  a  set  of  books  and  other  stationery  for  office  use,  $  50. 
Apku,  4.  —  Bought  of  William  Brown,  for  cash,  100  brls.  flour  at  $  S- 
April  4.  ^  Paid  rent  for  the  month  of  April,  S  75. 
April  5.  —  Sold  Henry  Davis,  for  cash,  50  brls.  flour  at  $6. 

April  5.  —  Bought  of  Haynes  &  Co.,  on  account,  100  brls.  pork  at  S9,  100  brls.  beef 
at  S  12. 

April  6.  —  Sold  John  Wood,  on  account,  50  brls.  flour  at  $6,  25  brls.  beef  at  S  15. 
April  8.  —  Sold  A.  O.  Henry,  on  his  30  day  note,  50  brls.  pork  at   S  12,  25  brls.  beef 

at  S  15- 

April  9.  —  Bought  of  Jordan  Bros.,  on  my  60  day  note,  125  brls.  salt  at  S  1.25. 


SL'PPLEMKNTARV    EXERCISE   NO.    2  — APRIL  71 

April  ii.  — Bought  of  Haynes  &  Co.,  on  my  note  at  30  days,  125  brls.  pork  at  $9,  100 
brls.  beef  at  $  12. 

April  12.  — ^Paid  Haynes  &  Co.  cash  for  invoice  of  the  5th  inst. 

April  13.  —  Received  $970.94  in  cash  from  A.  t).  Henry  for  his  S975  note,  dated  April 
S,  less  discount  for  the  unexpired  time,  $  4.06. 

April  13.  —  Paid  $2314.15  in  cash  for  my  $2325  note  to  Haynes  &  Co.  of  the  nth 
inst.,  less  discount  for  the  unexpired  time,  $  10.85. 

April  16.  —  Sold  D.  M.  McKensey,  for  cash,  100  brls.  pork  at  $  12. 

April  16.  —  Received  of  John  Wood  cash  for  bill  of  April  6th. 

April  17. — Paid  cash  for  coal  for  use  in  store,  $20.75. 

April  19.  —  Sold  Clark  &  Henry,  on  account,  40  brls.  salt  at  $  1.75. 

April  20.  —  Sold  Martin  &  Co.,  on  their  10  da.  note  with  interest,  25  brls.  pork  at  $  12, 
50  brls.  beef  at  $  15  ;  20  brls.  salt  at  $  1.75. 

Make  no  entry  for  the  interest  at  this  time. 

April  23.  —  Bought  of  Larkin  &  Co.  40  brls.  lard,  Sooo  lbs.,  at  12.]  ^.  Paid  cash  $  500; 
balance  on  account  30  da. 

April  25.  —  Sold  A.  C).  Henry,  on  account,  25  brls.  pork  at  $  12,  75  brls.  beef  at  $  15, 
50  brls.  salt  at  S  1.75. 

April  27.  —  Paid  cash  for  freight  and  drayage,  $  37.82. 

April  29.  —  Sold  John  Wood,  on  account,  15  brls.  lard,  3000  lbs.,  at  17/. 

April  30.  —  Received  $  1086.81  cash  from  Martin  &  Co.  for  their  $  1085  note  of  the 
20th  inst.,  with  interest. 

Has  the  $1.81  interest  been  allowed  by  you  or  to  you .'     See  rule,  page  46. 

April  30.  —  Paid  cash  as  follows :  Bookkeeper's  salary,  $75;  Clerk's  salary,  $50;  Gas 
bill,  $  7.  So. 

After  you  have  posted  the  journal  entries  for  the  above  transactions,  take  a  trial  balance. 

The  inventory  of  merchandise  at  the  end  of  the  month  is  $  1 168.75. 

Make  out  statements  of  results,  and  close  the  ledger. 

Hand  your  work  to  the  teacher  for  examination  and  approval. 


TEA,    COFFKI-:,    AND    SPICE    BUSINESS      MAY 

Having  been  offered  a  higher  salary  and  a  better  opportunity  for  advancement,  you  have 
accepted  a  position  as  bookkeeper  for  Henry  F.  Adams,  who  is  about  to  commence  business 
as  a  wholesale  dealer  in  Tea,  Coffee,  and  Spices,  at  246  Main  St.,  your  city.  Your  salary 
is  to  be  S75  per  month.  Mr.  Adams  will  do  all  the  buying  and  fix  all  selling  prices  of  the 
goods,  and  will  spend  much  of  his  time  on  the  road.  You  will  receive  all  goods,  verify  the 
prices,  etc.,  attend  to  the  filling  of  all  orders,  and  have  full  charge  of  the  books  of  the  busi- 
ness. 

Books  Kept.  — The  books  which  )  ou  will  keep  in  this  work  are  the  journal-daybook,  cash 
book,  check  book,  sales  book,  and  ledger. 


^ 


y/Zi^-^ 


.'Z 


'J 


'J-    -j?^r^^<_^i^^sz.<i^?^.d-^^ 


y^^^'Y\  -Y^^e. 


■ez.^yz.-c.£^ 


■yO-^^^^~^'^-o<  "^^?<2«^'«^='z-»<'..<»2.<'£S^^zi:<iii;- 


■..e^i'-£-->^^  c:Cei;iiy,-C<.AJ  S"/, 


^  o  i>  c 
prz/  fa 

Z  ''f  /TO 

Ceo  I 

fZ<f 
^  Ze> 

z6e> 


—■^i-^ 


yS'-f^^ —■f^-iZ.^ 


--^3-e?^ 


rC-j-i/s 


'ft^^  ^J- 


.  .fds 


if 


The  Cash  Book.  -  Cash  transactions  are  numerous  in  almost  anv  business,  and  from  this 
fact  it  has  been  found  advisable  to  take  the  Cash  account  from  the  ledger  and  place  it  in  a 
book  called  the  "Cash  Rook."  On  the  left-hand  page  of  the  cash  book  arc  entered  all  cash 
debits,  with  the  name  of  the  account  to  be  credited  in  the  first  wide  column,  and  in  the  sec- 

72 


THE   CASH    BOOK  _  MAY  73 

ond  wide  column  a  brief  description  of  the  transaction.  The  amount  is  entered  in  the  left- 
hand  money  column.  All  items  of  cash  paid  out  or  cash  credits  are  entered  on  the  right- 
hand  page  of  the  cash  book,  with  the  name  of  the  account  to  be  debited  in  the  first  wide 
column,  and  a  brief  description  of  the  transaction  in  the  second  wide  column.  The  amount 
is  entered  in  the  left-hand  money  column.  The  e.xtra  column  at  the  left  of  the  first  wide 
column  is  for  the  ledger  page  when  the  item  is  posted. 

Since  the  debit  of  the  cash  book  shows  all  cash  received,  and  the  credit  all  cash  paid 
out,  it  is  evident  that  the  difference  between  the  two  sides  of  the  cash  book  should  show  at 
any  time  the  amount  of  cash  on  hand. 

It  is  unnecessary  to  keep  a  Cash  account  in  the  ledger,  although  some  bookkeepers  do 
so,  carrying  the  total  receipts  for  each  day  or  month  to  the  debit  side  of  it,  and  the  total 
payments  for  each  day  or  month  to  the  credit  side. 

The  cash  book  should  be  balanced  at  frequent  intervals.  If  a  considerable  amount  of 
business  is  done  in  cash,  it  is  well  to  balance  the  cash  daily.  In  this  and  in  all  following 
sets,  the  Cash  account  will  be  kcjjt  in  the  cash  book  only,  and  not  carried  into  the  ledger. 


^2-^^<^^^ 


i\ 
f/ 

fZ 

'J 


^^^ 


tZ-'J^Z.^VZ.^^ 


y^-yi<>-t£^£z^i^,d't>'.'t^ 


iZ.OoA'^ 


d  t;  i? 

^  If 


1^_ 


■'iT/i-J-^S 


Remember  that  the  cash  book  is  the  Cash  account  of  the  ledger;  therefore,  the  balance  of 
the  cash  book  must  be  carried  into  the  trial  balance  when  that  is  taken  from  the  ledger. 

The  Sales  Book.  —  It  is  customary  in  business  to  enter  all  sales  of  merchandise,  whether 
for  cash,  on  account,  or  for  a  note,  in  a  book  called  the  "Sales  Book."     The  footing  of  this 


74  MODERN   ILLUSTRATIVE  BOOKKEEPING 

book  will  at  aii)^  time  show  the  total  sales  of  merchandise,  for  the  month  or  other  period,  to 
date.  This  book  does  away  with  a  long  Merchandise  account  in  the  ledger,  as  the  footing 
of  the  sales  book  is  carried  to  the  credit  of  Merchandise  in  the  ledger  at  the  end  of  each 
month,  or  as  often  as  may  be  desired. 

The  first  or  left-hand  money  column  of  the  sales  book  contains  the  separate  items  of 
each  bill.  The  second  or  right-hand  money  column  contains  the  total  amount  of  each  sale, 
which  is  to  be  posted  to  the  debit  side  of  the  customer's  account  in  the  ledger. 

Form   of   S.vles   Book 


^7y 


/ 


V 


>cr 

(^, 

rS-^U^ 

/■ 

r 

/■ 

.    .-r-. 

^^ 

" 

/  0  '- 

^  - 

sS  ^ 

/f^.. 


/J 


or 


'M: 


I   1/ 


7lt.-t^y. 


^yy^z-iHiy, 


2^, 
J 


=  ^/, 


If  tr 


//  /  ^  ^  /\ 


Joo^ 


/SC? 

7^' 


so 


I 


y^zso 


z^o 


-J.J 


■i 


yj  -2J2Ji^ 


/Z2.7 


ZS 


BUSINESS   PRACTICE— MAY 


75 


TRANSACTIONS 

No.  1.  —  Mav  I,  19 — .     Mr.  Adams  gives  you  a  power  of  attorney. 

Take  the  document  from  the  incoming  vouclier  pad,  fill  in  the  proper  names  in  tlie  blank 
spaces,  and  file  it. 

No.  2.  —  Mav  i.  Ask  your  teacher  to  assign  you  a  price-list  from  the  numbered  lists  on 
pages  102  and  103,  and  take  from  your  incoming  voucher  pad  the  cash  required  for  Henry 
F.  Adams's  investment,  $8800. 

Make  an  entry  in  your  journal-daybook,  giving  a  description  of  the  conditions  under 
which  the  business  is  begun.  Do  not  extend  the  amount  of  cash  received  in  the  money 
column.     The  following  illustrates  the  form  of  your  journal-daybook  entry. 


/J 


'y,y 


y 


It  is  customary  in  commencing  business  to  write  in  the  journal-daybook  a  brief  statement  of  the  conditions 
under  which  the  business  was  commenced,  and  if  it  be  a  partnership,  a  brief  summary  of  the  partners'  agree- 
ment. This  record  is  made  in  the  journal-daybook  as  a  matter  of  convenience  only.  The  amount  is  not  ex- 
tended in  the  money  column,  as  this  is  a  cash  transaction,  but  the  entry  therefor  is  made  in  the  cash  book. 

Sometimes  such  a  record  as  the  above,  an  abstract  of  the  principal  accounts,  and  a  record  of  the  results  of 
the  business  are  kept  by  the  proprietor,  one  of  the  partners,  or  a  confidential  clerk  in  a  private  set  of  books. 

Cash  Book  Entry. — Enter  the  amount  of  cash  received  in  your  cash  book,  which  you 
should  begin  in  Blank  No.  i  at  the  place  indicated  by  the  index  on  the  front  cover;  notice 
that  this  is  a  left-hand  page,  which  should  be  numbered  2.  The  following  illustrates  the 
form  of  the  entry,  but  the  amount  and  proprietor's  name  are  different. 


,/^^tzy  /       -yC>,>^7^=J,::^^^^-?'Z^'tiyyz^ 


'.^f'Z.yZ^-d,,ai'^>3'J'Z,£.^'7.^/~^ 


C^2  0  O 


/ 


The  amount  is  entered  in  the  first  money  column  of  the  debit  or  left-hand  page  of  the 
cash  book.  The  date  is  written  at  the  left,  as  in  a  ledger.  In  the  first  wide  column  is  writ- 
ten the  name  of  the  account  to  be  credited,  and  in  the  second  wide  column  a  brief  descrip- 
tion of  the  transaction.     Place  the  cash  in  your  Cash  Drawer. 


76 


MODERN'   ILLUSTRATIVE   BOOKKEEPIN'G 


No.  3.  —  Mw  I.  Pay  one  muiUh's  rent  in  advance  to,  and  take  a  receipt  from,  the 
National   Real   Estate  Co.,  which  owns  the  building  at  246  Main  St. 

Put  the  receii^t  in  your  Voucher  File.  Make  an  entry  for  this  transaction  on  the  credit 
or  right-hand  page  of  the  cash  book.    The  following  illustrates  the  form  of  cash  book  entry. 


t?Q. 


y/ii^-ez-y 


(j^;^^^/i,c-'yz..d-€y 


-^■t^-?^  y/Zn^ 


f. 


I 


The  first  wide  column  contains  the  name  of  the  account  to  be  debited,  and  the  second 
wide  column  a  brief  description  of  the  transaction.  All  cash  received  or  paid  out  must  be 
entered  in  the  cash  book. 

No.  4.  —  Mav  2.  You  have  purchased  of  the  Upton  Coal  Co.,  for  cash,  5  tons  coal  at 
35.25,  amounting  to  $26.25. 

This  is  a  cash  transaction  and  the  entry  will  be  made  on  the  credit  side  of  the  cash 
book,  since  cash  is  paid  out.     The  following  illustrates  the  form  of  the  entry. 


0-. 


■ — 25i!"-»z-=/  ^«-*?-zz-^ 


No.  5.  —  ]\I.\v  2.  "S'ou  have  bought  on  account  an  invoice  of  merchandise  from  West, 
Stone  &  Co.,  New  York  :  20  half  chests  Japan  tea,  containing  altogether  1200  lbs.,  at  23^ 
per  lb.,  etc. 

In  this  scries  of  transactions  you  will  not  receive  cards  to  represent  merchandise,  but 
will  assume  that  the  merchandise  has  been  received,  and  will  check  each  item  on  the 
invoice  after  verifying  the  calculations.  If  you  find  the  invoice  correct,  O.K.  it.  If  not, 
ask  your  teacher  (representing  West,  Stone  &  Co.)  what  to  do.  This  transaction  calls  for 
an  entry  in  the  journal  (sec  rule  5,  page  12  or  46).  Write  Entered,  with  the  date,  on  the 
invoice,  and  put  it  in  your  Invoice  File. 

Terms  of  Payment  are  of  great  variety.  .\  few  of  the  more  common  terms,  and  tlie  method  of  indicating 
them,  are  as  follows  : 

'•Terms  on  account,''  often  aljbreviated  "/,.,  usually  means  tliat  the  bill  is  due  on  the  first  of  the  following 
month. 

"Terms  -/-  30  das.,"  or  "30  das.,"  signifies  that  the  bill  is  due  in  30  days  from  date  of  invoice. 

"Terms  Net"  or  "Net  Cash"  indicates  tliat  no  discount  will  be  allowed  for  cash. 

"Terms  Cash  2%"  or  "2%  Cash"  indicates  that  an  allowance  of  2/0  will  be  made  off  the  amount  of  the  in- 
voice if  it  is  paid  at  once  or  within  a  certain  short  time,  as  ten  days.  The  custom  of  business  houses  varies  as  to 
the  lime ;  some  insist  that  only  three  days  should  be  allowed  ;  many  allow  ten  days  :  and  others  allow  thirty  days. 

If  a  bill  is  paid  promptly,  it  is  customary  with  many  to  take  otT2%,  even  though  the  terms  are  not  so  stated. 

"Terms  30  das.,  3/10,"  signifies  that  the  amount  of  the  bill  will  be  due  in  30  days,  but  3"/^  will  be  allowed 
ofi"  tlie  amount  if  it  is  paid  within  ten  days. 

"Terms  2/ro,  1/30,  net  60."  indicates  thai  2%  discount  will  be  allowed  if  paid  within  ten  days,  1%  if  paid 
within  30  days,  and  that  the  amount  of  the  bill  will  be  due  without  discount  in  60  days. 

"Terms  C  O.D.  Am.  Ex."  means  that  the  goods  have  btvn  sent  C.O.D.  (cash  10  be  paid  on  delivery)  by 
the  American  Express,  and  thai  no  discount  will  be  allowed. 


BUSINESS   PRACTICE— MAY 


77 


"Terms  C.O.D.,  less  2%,  U.  S.  Ex."  means  that  merchandise  has  been  sent  by  United  States  Express, 
C.O.D.,  and  that  270  discount  will  be  allowed  from  amount  of  invoice. 

No.  6.' — Mav  2.  Goods  have  been  purchased  of  L.  Hennes  &  Co.,  New  York,  by  Mr. 
Adams,  who  has  agreed  to  give  a  note  at  60  days  in  payment. 

Verify  the  calculations.  Write  the  note  required  by  the  transaction.  Fill  out  the  stub 
of  your  note  book;  then  detach  the  note  and  place  it  in  Bills  Payable  File. 

In  this  transaction  you  will  debit  McrchatuUse  in  the  journal  and  credit  L.  Hennes  &■  Co.  for 
the  amount  of  the  invoice,  and  debit  L.  Hennes  Sr  Co.  and  credit  BiV/s  Parable  for  the  amount 
of  the  note  given  them  in  payment,  making  two  complete  but  separate  journal  entries. 

The  one  journal  entry,  Mdse.,  To  Bills  Payable,  would  be  sufficient  to  record  the  transaction  (see  transaction 
No.  54,  pages  28,  29) ;  but  Mr.  Adams  expects  to  purchase  of  L.  Hennes  &  Co.  also  on  account,  and  it  is  ad- 
visal)le  that  their  personal  account  in  your  ledger  should  show  all  transactions  made  with  tlieni,  hence  the  entries 
should  be  made  as  directed  above. 

No.  7.  —  May  2.  Deposit  in  the  Commercial  Bank  all  your  cash,  except  $200,  which 
you  may  retain  in  the  Cash  Drawer. 

Make  out  a  deposit  slip  and  hand  it  to  the  cank  teller  with  the  currency  and  bank  pass 
book.      Do  not  fail  to  enter  the  deposit  on  the  stub  of  your  check  book. 

No.  8.  —  May  3.  This  invoice  of  merchandise  has  been  purchased  of  Shields  Bros., 
City,  for  cash,  and  you  receive  a  discotnit  of  2%. 

Verify  the  calculations.  Make  a  journal  entry  for  the  purchase  of  goods,  debiting  Mer- 
chandise and  crediting  Shields  Bros,  for  the  gross  amount  of  the  bill,  this  being  the  amount 
before  the  discount  is  subtracted. 

Write  a  check  in  favor  of  Shields  Bros,  for  the  net  amount  of  the  bill,  which  is  the 
amount  after  the  discount  has  been  taken  off.  Do  not  forget  to  fill  out  the  stub  first, 
and  to  subtract  the  amount  from  the  amount  in  bank.  Show  the  gross  amount  and  the 
discount  on  the  stub  of  check  book,  in  the  blanks  left  for  the  purpose. 

Make  the  following  entry  in  the  cash  book,  credit  side,  debiting  Shields  Bros,  and  credit- 
ing Cash  for  the  full  amount  of  the  purchase. 


3 


■^lA^C-c/^^  ySuh^. 


--^X?^-'^^  /3 


',2^ 


z  J^^so\ 


This  entry  credits  Cash  with  $  5.69  (the  amount  of  the  discount)  more  than  the  amount 
actually  paid.  To  offset  this,  enter  on  the  debit  side  of  the  cash  book  the  amount  of  the 
discount,  crediting  JMerchandisc  Discount.     This  is  the  entry. 


3 


./^^W:l:^-.€-<-c^Z^2-<;£'i:^ 


.--{yyi^t/r- 


■^^JA^i^^/dJ  Siy:^/3,x7-        -J'h 


The  difference  between  the  amounts  entered  on  the  debit  and  credit  sides  of  the  cash 
book  is  the  same  as  the  amount  of  cash  paid  out,  and  represents  a  net  credit  to  the  cash 
account.  Shields  Bros,  are  debited  for  the  full  amount  of  the  invoice,  because  this  is  the 
amount  of  the  debt  settled,  and  Merchandise  Discount  is  credited  because  it  produced  value 
by  saving  to  the  business  the  amount  of  the  discount  allowed. 

^ale  19.  —  Merchandise  Discou.xt  is  credited  ivhcn  a  discount  is  allowed  to  the  busi- 
ness for  the  payment  of  a  bill  of  merchandise  at  a  given  time  ;  for  such  a?i  allowance  saves  or 
produces  value  for  the  business. 


78 


MOm.RX   ILLUSTRATIVE  BOOKKEEPING 


No.  9.  —  Mav  3.     This  order  calls  for  a  sale  of  merchandise  to  A.  W.  McKey,  on  account. 
Make  out  the  bill,  checking  each   item  on  the  order  as  soon  as  entered  on  the  bill. 
Verify  your  calculations  and  be  sure  the  bill  is  right. 

The  number  of  pounds  in  a  half  chest  of  Japan  tea  varies  somewhat.  In  .ictual  business  the  number  of 
pounds  in  each  lot  sold  is  found  loy  weighing.  In  your  work  here,  however,  you  may  assume  th.at  each  half 
chest  of  Japan  has  tlie  atteragc  weiglit  (60  lb.)  shown  by  voucher  No.  5.  A  similar  assumption  may  be  made 
concerning  other  goods  (see  Price  Lists,  p.  102). 

In  this  month's  work  all  sales  of  merchandise  in  wholesale  lots,  whether  on  account  or 
otherwise,  will  be  entered  in  the  sales  book.  Therefore,  enter  this  bill  in  the  sales  book, 
which  you  should  begin  in  Blank  No.  i  at  the  place  indicated  by  the  indc.ic  on  the  front 
cover.     See  form  of  entry  below.     The  names  and  items  are  different. 

No.  10.  —  iM.w  4.  F"ill  F.  C.  Tenney's  order  and  allow  him  3  %  off  for  cash  ;  also  deposit 
his  check  in  the  bank. 

Make  out  the  bill  and  deduct  3  %  discount  from  the  gross  amount.  Use  bill  No.  8  in 
your  Voucher  File  as  a  model.  After  Terms  write  Cash  j^/c.  If  the  net  amount  of  the 
bill  agrees  with  F.  C.  Tenney's  check  No.  10,  S611.10,  receipt  the  bill  and  place  it  in 
Vouchers  for  Others.  Enter  the  sale  in  your  sales  book,  one  line  below  your  last  entry, 
debiting  F.  C.   Tctimy.     Write  the  date  in  the  middle  of  the  line,  as  in  the  journal. 

Do  not  deduct  the  discoiuit  in  the  sales  book,  but  enter  the  sale  for  the  full  amount, 
which  will  be  posted  to  the  debit  of  Tenney's  account  in  the  ledger. 

The  following  shows  the  form  of  your  sales  book  to  date,  the  names  and  amounts  being 
different.     Notice  the  addresses  of  customers,  and  the  terms  given. 


(2?,// 


32-^  (p.  3-', 
3  y^c-ffL-<d.-^..<i-y 


/3f 
1^0 


iA 


J-A^3'^^ 


'AT/ 


3'o/' 


/zj- 


ZU-J 


Z33 


BUSINESS   PRACTICE  — MAY  79 

Give  F.  C.  Tcnncy  credit  on  the  debit  side  of  the  cash  book  for  the  full  amount  of  the 
bill.  When  this  auiount  is  posted  to  the  ledger,  his  account  will  balance.  Enter  the  amount 
of  the  discount  on  the  credit  side  of  the  cash  book,  debiting  Ahrclumdise  Discount.  See 
form  of  entry  in  cash  book,  pages  72  and  "ji.  May  15,  P.  M.  Trainer  on  debit  side  and  Mer- 
chandise Discount  on  credit  side. 

The  principles  involved  in  recording  this  transaction  are  similar  to  those  in  transaction  No.  8.  althoiij;li  this 
transaction  is  the  exact  reverse  of  the  other.  In  No.  8  the  full  amount  of  the  purchase  was  entered  in  the  journal 
to  the  credit  of  the  lirm  from  whom  purchased,  and  Merchandise  was  debited.  Here  the  full  amount  of  the  sale 
is  entered  in  the  sales  book,  which  debits  the  firm  to  whom  sold  and  credits  Merchandise.  The  cash  book 
entries  are  also  similar  in  that  the  full  amount  of  the  bill  settled  is  entered  on  one  side  to  the  firm's  account  and 
the  discount  on  the  opposite  side  to  Merchandise  Discount. 

By  this  method  of  enterinu;  cash  purchases  and  sales  whc'U  a  discount  is  allowed.  Merchandise  Discount 
account  will  sliow  the  total  amount  allowed  by  the  business  to  others  (debit  side)  and  the  total  amount  allowed 
by  others  to  tlie  business  (credit  side)  for  prompt  payment,  while  Merchandise  account  will  show  the  total  cost 
and  total  production  of  goods  handled. 

Rule  20. — iMerchand/sb  DiscorxT is  debited  zvlioi  a  discount  is  alUnvcd  by  tlic  business 
to  others  for  the  payment  of  a  bill  of  merchandise  at  a  given  time  ;  for  such  an  allozvance 
costs  the  business  value. 

In  this  and  the  following  ni(inth's  work,  cash  sales,  except  for  occasional  small  purchases 
made  by  individuals  who  are  ndt  regular  customers,  will  be  entered  in  the  sales  book  and 
charged  to  the  persons  making  them,  while  the  payments  will  be  entered  in  the  cash  book 
and  credited  to  the  persons  making  them.  In  this  way  the  ledger  accounts  of  all  regular 
customers  of  the  business  will  show  the  amount  of  all  purchases  they  have  made,  both  on 
account  and  for  cash. 

Make  out  a  deposit  ticket  for  F.  C.  Tenney's  check.  Indorse  the  check  properly  (see 
illustration,  p.  64).  Make  a  memorandum  of  the  deposit  on  the  left-hand  page  of  check 
stubs,  opposite  stub  of  next  check  to  be  made  out.  Place  the  deposit  slip  with  the  check 
in  your  bank  pass  book,  and  have  the  amount  entered  at  the  bank.  Enter  the  amount  on 
the  stub  of  your  check  book  and  add  to  your  deposit.      Make  no  entry  in  the  cash  book. 

No.  11.  —  May  4.     Fill  this  order  for  merchandise  sold  to  Dickson  &  Young. 
Make  out  the  bill  and  check  the  items  on  the  order.      Enter  the  transaction  in  the  sales 
book  and  place  the  order  in  your  Voucher  File.      Be  sure  the  amount  is  correct. 

No.  12.  —  Mav  4.  Pay  this  bill  of  Scrantom,  Wetmore  &  Co.  for  books  and  stationery  to 
be  used  in  the  office. 

Verify  the  calculations,  and  write  a  check  for  the  amount.  Enter  in  the  cash  book. 
Do  not  fail  to  deduct  the  amount  of  the  check  frotn  your  bank  balance.  This  is  a  common 
error  and  causes  much  trouble  in  balancing  the  bank  account  at  the  end  of  the  month. 

No.  13. — Mav  5.  This  bill  is  for  office  furniture  and  a  safe,  which  Mr.  Adams  has 
purchased  for  permanent  use  in  the  business.  An  account  of  this  property  will  be  kept  in 
the  ledger  under  the  head  of  "  P^irniture  and  Fixtures,"  instead  of  charging  it  to  Expense  as 
heretofore. 

Fill  out  a  check  for  the  amount  and  make  the  proper  entry  in  the  cash  book,  debiting 
Furniture  and  Fixtures. 

No.  14. — Mav  5.  Mr.  Adams  has  decided  to  purchase  the  building  and  lot  at  246  Main 
St.  of  the  National  Real  Estate  Co.     Their  price  is  $  12,000  cash.     Not  having  this  amount 


80 


MODKRN   ILLUSTRATIVE   BOOKKEEPING 


on  hand,  Mr.  Adams  has  arranged  with  James  D.  Branson  to  indorse  a  $  5000  note  for  him 
so  that  he  may  borrow  money  of  the  Commercial  Bank.  This  is  usually  spoken  of  by  busi- 
ness men  as  discounting  your  own  note  at  bank. 

The  following  is  the  form  of  note  required,  e.xcept  that  of  course  the  place  and  year 
need  to  be  filled  in. 


F 


^^^^^-7:^-7^ 


V 


(Your  piftca  hervj 


'C-a^^  i.:f~  y.9 


^f^^^^f^Jri^, 


WMwH«h»W<«.l»)...lT»r»»t—»HIY 


-^G^^i^■c,t!^C^.^nJ-,^:Z:tty, 


Indorsing  a  note  consists  in  writing  one's  name  on  the  back  of -the  note,  and  the  person 
who  thus  writes  his  name  becomes  responsible  for  the  payment  of  the  note  in  case  the 
maker  fails  to  make  payment  when  it  becomes  due.  The  note  given  above  is  made  payable 
to  the  order  of  the  indorser,  who  writes  his  name  upon  the  back  and  returns  it  to  11.  Y. 
Adams.  Adams  takes  the  note  to  the  bank,  receives  money  or  credit  for  it,  and  will  pay  the 
note  when  it  is  due.  In  case  he  should  fail  to  do  this,  James  D.  Branson  would  be  called 
upon  to  pay  it. 

Write  the  note  required  for  transaction  No.  14;  make  it  payable  at  Commercial  Bank. 
Take  the  note  to  your  teacher,  who  will  indorse  it  for  James  D.  Branson,  if  it  is  correct; 
then  take  it  to  the  bank  for  discount. 

The  note  is  due  Sept.  5th,  which  is  123  days  after  May  5th,  the  date  of  discount.  Bank 
discpunt  is  found  by  taking  the  simple  interest  on  the  face  of  the  note  for  the  time  in  days 
from  the  date  of  discount  to  the  date  of  maturity ;  therefore,  you  may  find  the  interest  on 
$5000  at  6  %  for  123  days,  which  is  $  i.xx.xo.  Subtract  this  amount  from  $  500x3,  and  the 
remainder,  $489x.xo,  is  the  net  proceeds,  or  amount  that  will  be  placed  to  your  credit  at  the 
bank. 

Hank  discount  i,s  the  simple  interest  on  the  face  of  commercial  paper  for  its  unexpired  time ;  that  i.s,  from 
tlie  date  the  paper  is  discounted  to  the  day  upon  wliicli  it  becomes  due.  //;  this  work  the  exact  iiiiinher  of  days 
between  these  two  dates  will  be  used  in  all  cahulations  of  bank  discount.  For  instance,  a  note  dated  May  1st  at 
four  months  would  be  due  Sept.  ist  of  the  same  year;  but  most  banks  discounting  such  paper  for  the  full 
time  would  not  calculate  the  interest  on  its  face  for  four  months  (120  days),  but  would  take  the  exact  number 
of  days  between  .May  1st  and  Sept.  1st  (123  days).  This  must  be  remembered  in  all  calculations  of  bank  dis- 
count. 

First  find  the  date  the  note  becomes  due  ;  next  find  the  number  of  days  to  elapse  from  the  day  of  discount  to 
the  day  of  maturity,  and  then  calculate  the  simple  interest  on  the  face  of  the  note  for  this  number  of  days  at  the 
rate  of  discount  given,  and  you  have  the  bank  discount. 

For  computing  the  interest,  any  method  that  is  based  ou  the  commercial  year  of  360  days  may  be  used, — 
.such  as  the  60-day  6  '/„  method,  etc. 


DISCOUNTING   NOTES— MAY 


81 


Discount  Memorandum.  —  Take  a  discount  mem- 
orandum from  your  envelope  of  Business  Forms,  and 
fill  it  out  properly.  Supply  the  items  from  Mr. 
Adams's  note.  Pin  the  memorandimi  and  the  note  to- 
gether, and  hand  them  with  your  bank  pass  book  to 
the  bank  teller,  who  will  place  the  net  proceeds  to 
your  credit  if  your  calculations  have  been  correctly 
made. 

The  form  of  memorandum  is  shown  herewith. 
The  name  and  amounts  are  not  the  same  as  ajjpear  in 
your  memorandum. 

In  case  no  bank  is  conducted  with  this  work,  you  may  place 
the  note  and  discount  sHp  in  Bills  Payable  File,  and  (acting  for  the 
bank  teller)  enter  the  amount  of  the  proceeds  on  the  left-hand  page 
of  your  bank  pass  book,  as  shown  in  tlie  fullowing  illustration. 


Form  of  Discount  Memorandum 


DISCOUNT    MEMORANDUM. 


^--gg-^  /.    ^f 


l>ISCOln«TKD  POR 


Facb  \S(!^  /^  i?J~i  IwT.  Total  : 


Dix-fPir',^  ■<^rH:oLi.. Total  : 


^ 


/^^T.Ui-^-yi.^f-tey.^^h^U^-til^^^^ 


^f7 


j-a 


After  the  amount   has   been  entered   in  your  pass  book,  make  an  entry  in  the  blank 
space  immediately  below  the  last  stub  filled   out  in 
your  check  book,  as  shown  in  the  following  illustra- 
tion ;  and  add  the  proceeds,  $4897.50,  to  the  balance 
in  bank  after  deducting  the  last  check. 

Cash  Book  Entry.  —  Make  an  entry  on  the  debit 
side  of  the  cash  book  for  the  face  of  the  note,  $  5000. 
The  following  is  the  form  of  your  entry. 


DcpQiiud  _ 


'^J^fyso 


JT 


J3c//jp^ 


iZ^. 


iS^-^^J.  c^-c-tA^  A^.--7'?'i.^.^^yu^i!iy 


S0OC 


This  entry  on  the  debit  side  of  the  cash  book  debits  CasJi  and  credits  Bills  Payable. 
Make  an  entry  on  the  credit  side  of  the  cash  book  for  the  amount  of   the   discount, 
$102.50.     The  following  is  the  form  of  your  entry. 


c^CZ-'<^J.'€^t?-t^.--ri^ 


o-u.yLyy^'i.^Htey,  /  23  ,-z:^. 


/CPZ 


■SO 


This  credits  Cash  and  debits  Discount. 

The  bank  really  gave  you  only  $4897.50;  but  if  the  bank  had  given  you  $5000,  you 
would  have  been  required  to  take  from  the  $5000  the  sum  of  $102.50  and  pay  it  to  the 
bank  for  discount;  and  this  is  the  principle  u])on  which  the  cash  book  entries  are  made. 

Mule  21.  —  Discount  is  debited  zuken  a  diseonnt  is  alloiued  to  others  on  a  note  oV  draft  ; 
for  such  an  allowance  costs  the  business  value. 

It  is  evident  that  the  accounts  affected  by  the  transaction  in  tlie  above  c.\ami)le  are  Cash,  since  cash  has 
been  received  by  the  business;  Discount,  since  discount  has  been  allowed  the  bank  for  cashing  the  note  123 


82  MODIiRN   ILLUSTRATIVE   BOOKKEEPING 

days  before  it  is  due;  and  Bills  Payable,  since  Mr.  Adams  has  given  a  note  payable  in  four  months.  It  is  evi- 
dent  that  C'lis/t  should  be  debite<l,  since  cash  has  been  received,  and  that  Hills  Payable  should  be  credited,  since 
a  note  has  been  issued  (see  rule  l6,  page  29).  Discount  has  cost  the  business  value,  since  you  have  allowed 
the  bank  5  102.50  for  cashing  a  note  before  it  is  due;  therefore.  Discount  should  be  debited  (see  rule  21). 

If  the  entries  were  made  in  the  journal,  Cash  and  Discount  would  be  debited  and  Bills  Payable  credited,  ac- 
cording to  the  following  form. 

Cash  4897.50 

Discount  102.50 

Bills  Payable  5000.00 

A  disti'-ction  is  made  between  discount  on  notes  and  drafts  and  discount  on  invoices  of  merchandise.  The 
former  is  c.illed  "  Discount  "  simply,  while  the  latter  is  designated  as  ■•  .Mercliandise  Discount,"'  or  "Cash  Dis- 
count." The  two  kinds  of  discounts,  although  .similar  in  character,  are  allowed  for  different  purposes  and  there- 
fore should  never  be  charged  to  the  same  account. 

After  you  have  finished  this  transaction,  you  will  do  well  to  return  to  page  79  and  re- 
view it  from  beginning  to  end. 

No.  15.  —  May  5.  Mr.  Adams  has  received  from  the  National  Real  Estate  Company 
the  deed  of  the  building  and  lot  No.  246  Main  St.,  and  has  sent  it  to  be  recorded.  Pay 
the  purchase  price,  ^12,000,  by  check. 

Write  the  check.  In  this  transaction  real  estate  has  cost  the  business  value,  and  there- 
fore Real  Estate  should  be  debited.  The  Real  Estate  account  is  subject  to  rules  like  those 
for  the  Merchandise  account. 

Utile  22. — Debit  Reai^  Estate  for  tJie  purchase  price  of  houses  ami  lauds  purchased,  aud 
also  for  all  amounts  paid  for  their  iuiproveineitt  and  pcnnaneut  repair. 

No.  16.  —  M.w  6.  This  invoice  of  merchandise  has  been  purchased  of  the  E.  Wcsten 
Tea  &  Spice  Co.  on  account. 

Verify  the  calculation.s.      Make  the  proper  entry  in  your  journal. 

No.  17. —  May  6.  This  order  from  A.  A.  Knowles  &  Co.  is  accompanied  by  a  note  for 
S500  to  apply  on  account.     Fill  the  order,  and  make  terms  60  days. 

Make  out  the  bill  and  check  each  item  on  the  order.  After  Terms  write  60  ds.  Enter 
in  the  sales  book  as  a  sale  on  account,  60  ds.,  making  no  mention  of  the  note  for  S500  re- 
ceived with  the  order.  In  your  journal  make  the  proper  entry  for  the  note.  What  account 
should  be  debited  .'     What  account  should  be  credited  f     Place  the  note  in  your  Cash  Drawer. 

No.  18  -  May  8.  Take  the  note  received  from  A.  A.  Knowles  &  Co.  to  the  Commer- 
cial Hank  and  have  it  discounted. 

Take  the  note  from  your  Cash  Drawer,  and  indorse  it  to  your  bank.  Calculate  the  dis- 
count on  the  note  from  May  Sth  to  the  date  of  maturity  (58  days).  The  discount  on  S  500 
for  58  days  at  6%  is  $4.x3.  Make  a  di.scount  memorandum  and  attach  it  to  the  note;  take 
the  note  to  the  bank  teller,  and  have  the  net  proceeds  entered  in  your  bank  pass  book. 
Enter  the  amount  on  the  stub  of  your  check  book,  as  explained  in  No.  14,  and  add  the 
amount  to  your  bank  balance.  Vou  have  now  discounted  Knowles's  note  at  bank;  in 
other  words,  you  have  had  the  note  cashed,  allowing  a  discount. 

Make  an  entry  on  the  debit  side  of  the  cash  book  for  the  face  of  the  note  (S500). 
The  following  illustrates  the  form  of  your  entry. 


yyZtz^  /<f 


-^2a^-^ 


Cc^^^^^-*Z^/^,^Sl^c.<:i''C^  I     .J'C  i 


BUSINESS    rKArrUK  —  MAY 


83 


Make  an  entry  on  the  credit  side  of  the  cash  book  for  the  amoiml  of  the  discount. 
The  following  illustrates  the  form  of  your  entry.  (See  rule  21,  and  analysis  of  transaction 
No.  14  accompanying  it.) 


/r 


:=.£i:^..<d'-C'C>-i.i-f-z^ 


Cc-C-C^-.-^'l^y'T^Z'^^'-i!^  .i^/Vs^,  <^ 


</r\ 


In  case  there  is  no  bank,  enter  the  proceeds  in  your  bank  pass  book  (see  model  in 
transaction  No.  14,  page  "j"]),  and  place  the  note  in  Vouchers  for  Others. 

No.  19. —  May  8.  Fill  this  order  from  F.  C.  Tenney  on  account.  What  should  you 
write  after  Ttnns  on  the  bill.''     Verify  your  calculations  and  make  the  proper  entry. 

No.  20. — As  a  convenience  in  preparation  for  making  your  next  report,  you  may  pencil 
foot  your  cash  book  and  sales  book.  As  the  first  page  of  your  sales  book  is  now  filled  you 
should  carry  the  footing  forward  to  the  top  of  the  next  page,  as  illustrated  below. 

Form  of  Entry  and   Ruling  at  Bottom  of  First  Page  of  Sales  Book 


-/oT-z^ 


-TO 


/-lO 


Form  of  Entry  at  Top  of  Second  Page  of  Sales  Book 


/S^U^-JtH^. 


/  2y0 


Notice  that,  in  making  this  transfer,  the  first  entry  is  in  red  ink  and  the  second  in  black. 
Never  make  the  same  entry  in  red  ink  twice  in  succession.  In  actual  business  the  footings 
in  the  sales  book  may  not  be  carried  forward  from  page  to  page  till  the  time  when  posting- 
is  to  be  done ;  but  if  so,  the  top  line  of  each  page  (after  the  first)  would  be  left  blank  to 
receive  the  footing  when  it  is  carried  forward. 

The  same  method  is  used  in  carrying  forward  the  footings  from  one  page  to  another  in  the  cash  book,  wlicn 
necessary,  as  illustrated  below. 

Form  of  Entry  and  Ruling  at  Bottom  of  Cash  Book  Pages 
Left-hand  Page  Riglit-luuid  Page 


\\---sj2\ro 


SiL 


XzTlP-t^. 


bt 


Form  of  Entry  at  Toi'  of  Following  Cash  Book  Pages 
Left-hand  Page  Right-hand  Page 


(J'^^<i^<^C/ 


\-.-<7^J-^^ 


/y4-«5^-^3^7-2-^     l^s'oz 


fo 


ZJZ 


su 


/Ci'2-<'-^-^^>-2-«?^ 


/J-'^  Z3 


84  MODEUX   ILLUSTRATIVE   BOOKKEEPING 

* 
A  ledger  account  is  forwarded  to  a  new  page  when  the  space  originally  allotted  to  the  account  has  been 
filk-d.     For  instance,  if  the  account  of  A.  H.  Harper  on  page   15  is  to  be  continued  on  page  24.,  the  following 
entries  might  be  made  (note  the  page  numbers  in  tlie  folio  columns). 

Form  of  Entkv  and  Ruling  on  Old  Ledger  Page  (15) 


^i;-t(pf 


?¥ 

iy.f 

■^^^. 


lit      i-<?7££. 


Form  of  Entry  on  New  Ledger  Page  (24) 


Z^/ 


y 


/ 


/^^-Wr-^4^ 


'\ 


(^/J" 


^jS^.^^.-^t^-L^.      -s   :^ojito 


No.  21.  —  May  8.  FOURTH  REPORT.  —  Fill  out  the  report  blank.  After  the  report 
has  been  approved  by  the  teacher,  balance  your  cash  book.  Rule  and  foot,  and  bring  down 
the  balance  to  the  debit  side  in  the  second  money  column,  but  before  doing  so,  see  that  the 
amount  agrees  with  your  report,  and  also  with  your  bank  balance  plus  the  amount  in  your 
cash  drawer  if  any.  See  model,  pages  72  and  73,  for  form  of  ruling  and  closing.  Hand  in 
your  cash  book,  journal,  sales  book,  and  all  vouchers  for  inspection. 

No.  22.  —  May  9.  The  invoice  of  Ainil  30th  received  from  West,  Stone  &  Co.  must 
be  paid  to-day,  in  order  to  take  advantage  of  the  3  %  discount  for  payment  in  10  days. 

Take  the  invoice  from  your  Invoice  File  and  calculate  the  discount  on  the  amount, 
S1693.50,  at  3%,  which  is  35.\.x.\.  Deduct  this  discount  from  S1693.50  and  draw  a  check 
for  the  remainder.  Proceed  with  check  book  and  cash  book  entries  similar  to  those  you 
made  for  transaction  No.  8,  page  TJ. 

No.  23.  —  May  9.     Fill  this  order  from  Fletcher  Bros.,  and  allow  3  9?)  cash  di.scount. 

Make  out  a  bill  at  the  regular  prices,  and  after  Terms  write  Cash  3  %.  Enter  the  sale 
in  the  sales  book.  Charge  Fletcher  Bros,  for  the  full  amount,  and  if  they  pay  the  bill 
within  two  or  three  days,  allow  them  the  discount. 

In  making  this  entry  on  the  second  page  of  the  sales  book,  begin  it  on  the  second  line, 
as  the  first  line  is  occupied  by  the  footing  from  the  preceding  page.  Enter  the  date  of  this 
transaction  at  the  top  of  the  page  only,  the  same  as  on  the  first  page. 

No.  24. —  May  10.     This  purchase  has  been  made  of  Shields  ]-?ros.,  on  account. 
Verify  the  calculations,  and  make  the  proper  entry. 

No.  25. — May  10.  This  check  has  been  received  from  Fletcher  Bros,  in  payment  of 
invoice  of  goods  sold  them  on  May  9th,  terms  cash  3%. 

Is  the  check  for  the  correct  amount .'  Make  cash  book  entries  similar  to  those  for  tran- 
saction No.  10,  page  78. 

No.  26.  —  I\I.\Y    II.     Dickson  &  Voimg  hand  you,  on  account,  S  200  in  currency. 
Place  the  bills  in  your  Cash  Drawer,  give  a  receipt,  and  make  the  proper  entry. 


BUSINESS   PRACIICE  —  M AY 


85 


No.  27.  —  Mav  II.  Deposit  $200  currency  and  the  check  of  Fletcher  Bros,  in  Com- 
mercial Bank. 

Make  a  deposit  ticket,  placing  $300  opposite  B///s;  and  A/fim/cc;  J06.64  opj)osite  Cluck. 
Enter  on  left-hand  page  of  check  stubs.  Take  the  ticket  with  the  cash,  the  check,  and 
your  bank  pass  book,  to  the  bank,  and  have  the  amount  placed  to  your  credit.  Then  enter 
the  deposit  on  the  right-hand  page  of  stubs,  and  add  the  amount  to  your  balance  in  bank. 

Nc.  28.  —  Mav  12.  Fill  A.  W.  McKey's  order,  on  account.  Make  out  the  bill,  and 
check  each  item  from  the  order. 

N.B.  The  student  must  always  make  proper  entry  for  each  transaction,  whether  or  not  he  is  especially  tuld 
to  do  so. 

No.  29.  —  Mav  14.     H.  F.  Adams  draws,  by  check,  $100  for  his  private  use. 

Make  a  check  payable  to  the  order  of  H.  F.  Adams,  after  filling  out  the  stub  and  de- 
ducting the  amount  from  the  bank  balance.  Be  sure  to  explain  on  the  stub  that  it  is  for 
private  use.     Hand  the  check  to  Mr.  Adams  (by  placing  it  in  \'ouchers  for  Others). 

Form  of  Ackxowledgmknt  of  Rf.mittanxf, 


WESTERN  OFFICE;  y^ 

33*  OEAReORN  ST.  CHICAGO. I  L 


^^^Z^^.^^.-/-^  yyZ-r:^  ^^ 


Gentlemen: 


^^, 


Your  favor  of y/iC-^^.-^  / /^ is  at  hand,    enclosing 

check  for  $ Z'^f^^  ^~~^^ .^.^T^.^j-^^^^-^:?. 


'^.^6.-^'^^  .^^<1^. 


^=^ 


/  ^ 


We  have  placed  this  amount  to  your  credit,  and   awaiting  your 
further  orders,  we  remain, 

Yours  truly. 


WILLIAMS  &  ROGERS. 


86  MODERN   II.I.fSTRATIVE   F.OOKKEKriXG 

No.  30.  —  May  1.4.  When  Mr.  Adams  bought  the  building  No.  246  Main  St.,  it  was 
insured  by  the  Kquitable  Fire  Insurance  Company  for  $8000.  The  policy  has  expired  and 
has  been  replaced  by  a  new  one,  running  for  one  year;  you  may  write  a  check  for  S80  to 
pay  for  it. 

Do  not  fail  to  fill  the  stub  and  deduct  the  amount  from  your  bank  balance.  Check  may 
be  made  payable  to  order  of  S.  B.  Stearns,  Agent,  or  to  order  of  Equitable  Fire  Insurance 
Co. ;  either  way  is  correct.     Debit  Expense. 

In  case  a  large  amount  of  insurance  i-s  carried,  it  may  be  advisable  to  open  an  Insurance  account  instead  of 
carrying  the  cost  of  insurance  to  the  Expense  account,  but  in  the  ordinary  course  of  business  this  outlay  may 
very  consistently  be  carried  to  the  Expense  account,  since  there  is  no  return  from  it. 

No.  31.  —  Mav  15.     Fill  this  order  from  F.  H.  Randall  &  Co.,  on  account. 
Write  the  terms  on  the  bill.     Check  each  item. 

No.  32.  —  Mav  15.     This  check  is  received  from  F.  C.  Tenney  on  account. 
Write  an  acknowledgment  of  the  remittance  (see  form,  page  85)  and  place  the  check  in 
your  Cash  Drawer. 

No.  33. —  Mav  15.  FIFTH  REPORT.  Make  your  report  and  see  that  your  cash  on 
hand  in  the  report  agrees  with  the  cash  as  shown  by  the  balance  on  the  stub  of  your  check 
book,  plus  the  currency  and  checks  in  your  Cash  Drawer,  and  also  see  that  it  agrees  with 
the  balance  of  your  Cash  account,  as  shown  in  the  cash  book. 

After  your  report  has  been  O.K'd,  balance  your  Cash  book,  rule  and  foot,  and  bring 
down  the  balance  on  the  debit  side  in  the  last  money  column.     (See  form,  pages  72  and  Tl.) 

Present  all  books  and  vouchers  to  \our  teacher  for  approval. 

POSTING 

Opening  Accounts.  —  At  the  top  of  page  17,  or  the  first  right-hand  blank  page  in  your 
ledger,  write  //.  /'".  Adams.  At  the  top  of  page  iS  write  Mcrcltandisc.  In  the  middle  of 
page  18  write  JLvpcnsc.  At  the  top  of  page  19  write  Alcirliandisc  Discount.  In  the  middle 
of  page  19  write  Inriiititrc  and  Fixtp-.rcs.  At  the  top  of  page  20  write  Real  Estate.  In  the 
middle  of  page  20  write  Discount.  In  the  middle  of  page  21  write  Loss  &  Gain.  At  the 
top  of  page  22  write  Bills  Receivable.  In  the  middle  of  page  22  write  A.  A.  Knowles  &  Co. 
At  the  top  of  page  23  write  Dickson  &•  Young.  In  the  middle  of  page  23  write  A.  \V.  Mc- 
KcY.  At  the  top  of  page  24  write  F.  C.  Tenney.  In  the  middle  of  page  24  write  Fletcher 
Bros.  At  the  top  of  page  25  write  F.  If.  Randall  &  Co.  In  the  middle  of  page  25  write 
Rice  &  Pond.  At  the  top  of  page  26  write  E.  Mason  &  Co.  At  the  top  of  page  30  write 
Bills  Payable.  In  the  middle  of  page  30  write  West,  Stone  &  Co.  At  the  top  of  page  31 
write  if.  Westen  Tea  &  Spice  Co.  In  the  middle  of  page  31  write  Shields  Bros.  At  the 
top  ot  page  32  write  L.  J/ennes  &  Co.     In  the  middle  of  page  32  write  Clias.  K.  Fox. 

See  that  you  have  the  proiicr  address  on  each  [icrsonal  accoimt  (refer  to  sales  book  and 
vouchers). 

Posting  from  the  Journal  is  done  the  same  as  heretofore,  excepting  that  /is  written  in 
the  explanation  space  in  the  ledger  to  indicate  that  the  entry  was  brought  from  the  journal. 
See  illustration  on  debit  side  of  Merchandise  account,  page  88. 

Post  from  your  journal,  and  be  careful  to  postmark  both  journal  and  ledger. 

Posting  from  Cash  Book.  —  Each  amount  on  the  debit  side  of  the  cash  book  is  posted  to 
the  credit  side  of  the  ledger  account  named  on  the  same  line  in  the  first  wide  space.      C  is 


I'OSnXG  — MAY 


87 


written  in  the  explanation  space  in  the  ledger  to  indicate  that  the  amount  is  posted  from 
the  cash  book.  The  following  shows  the  first  amount  as  posted  to  11.  ]■".  Adams's  account. 
When  this  entry  is  made  in  the  ledger,  the  item  is  postmarked  in  the  cash  book  by 
writing  the  ledger  page  of  H.  F.  Adams's  account  {ij)  in  the  third  narrow  column  (headed 
L.  F.  in  the  illustration  on  pages  72,  73). 


-^"Z:^^^,  i^^^^z^^^^^^^^ 


'7 


1-9  - 


-^ 


/*<^(?<? 


The  entry  on  the  credit  side  of  Tenney's  account  below  illustrates  the  third  amount 
posted  from  the  debit  side  of  the  cash  book.  Post  all  items  from  the  debit  side  of  the 
cash  book  in  a  similar  manner. 


l¥ 


t.-^^ 


a3  6^C-rL.c^?^-^i^ 


y/'^^sz^' 


^ 


-^.^eLJ^A^,  J '^. 


63  0 


^. 


s^' 


^- 


-4 


63  o 


Each  amount  on  the  credit  side  of  the  cash  book  is  posted  to  the  debit  side  of  the  ledger 
account  named  on  the  same  line  in  the  left-hand  explanation  space. 

The  following  illustrates  the  first  two  amounts  posted  from  the  credit  side  of  the  cash 
book.     Post  all  items  from  the  same  side  in  a  similar  manner.     Be  careful  in  postmarking. 


'■/z.  e^rz^'^'' 


/  17     - 


Z. 


^ 


2.  /  zji 


Posting  from  the  Sales  Book.  —  First  foot  the  sales  book,  and  clo.se  it  with  a  black  ink 
entry  according  to  the  following  form;  see  also  illustration  on  page  74  (your  amount  is 
different). 

L 


\37<f/^ 


\J^ 


This  footing  of  the  sales  book,  representing  the  total  sales  of  merchandise,  should  then 
be  posted  to  the  credit   side  of  Merchandise  account  in   the  ledger  as  illustrated  in  the 


m 


MODERN    II-IASTRATIVE   BOOKKEEPING 


form  below ;  write  S.  B.  in  the  explanation  column  in  the  ledger  to  indicate  that  the  item  is 
posted  from  the  siilos  book.  Postmark  the  item  in  the  sales  book,  by  writing  the  ledger 
page  of  Merchandise  account  (/(J)  as  shown  in  the  preceding  illustration. 


/^ 


''L-C^/-V<^  ;  ? 


^/. 


.£^y 


y/L  ri  ;'  : 


^' 


k? 


/J 


¥yfc 


2'tL/^^W/ 


r 


f^\3^ 


Next,  the  amount  of  each  sale  must  be  posted  to  the  debit  side  of  the  account  of  the  per- 
son or  firm  to  whom  the  sale  was  made,  with  the  terms  of  the  sale  in  the  explanation  space, 
as  in  Tenney's  account  on  page  ij  ;  this  will  indicate  that  the  entry  came  from  the  sales 
book.     If  there  are  no  special  terms,  write  .S.  B.  in  the  explanation  s]3ace. 

It  will  be  noted  that  the  posting  is  done  from  three  books  in  which  the  original  entries 
were  made.  C  in  the  explanation  indicates  that  the  entry  is  from  the  cash  book;  J,  from 
the  Joiunal ;  and  tile  terms  or  S.  B.,  from  the  sales  book. 

TRIAL   BALANCE 

Take  a  trial  balance  of  your  ledger.     (F'or  instructions,  see  No.  79,  page  32.) 
Do  not  forget  to  place  the  balance  of  cash,  as  shown  by  your  cash  book,  on  the  debit 
side  of  your  trial  balance.     This  is  a  common  omission.     Remember  that  the  cash  book  is 
really  the  Cash  account  of  the  ledger,  and  its  balance,  like  that  of  any  ledger  account,  must 
be  carried  to  the  trial  balance. 

Present  your  trial  balance  to  your  teacher  for  approval.  Do  not  make  business  and 
financial  statements,  as  the  trial  balance  is  taken  at  this  time  merely  to  show  that  your 
posting  is  correct,  and  that  you  understand  the  posting  of  the  cash  book  and  the  sales  book. 


TRANSACTIONS  FOR  MAY,  CONTINUED 

No.  34. — M.w  17.  Rice  &  Pond,  of  Georgetown,  your  state,  have  sent  you  an  order 
and  have  given  you  satisfactory  references.  Bill  them  the  goods  at  regular  prices,  terms 
cash  3  %. 

As  these  goods  are  to  be  sent  by  freight,  you  will  make  out  a  shipping  order  to  be  given 
to  the  railroad  company  which  is  to  transport  them,  and  also  two  receipts  to  be  signed  by 
the  agent  of  the  railroad  company  when  you  deliver  the  goods  to  him. 

One  of  these  receipts,  called  the  Bill  of  Lading,  you  will  forward  to  the  customer;  the 
other,  a  Memorandimi  copy  of  the  bill  of  lading,  you  will  retain.  The  bill  of  lading  and 
the  memorandum  copy  should  be  carefully  preserved  by  the  customer  and  the  shipper,  as 
one  of  them  is  necessary  in  making  proper  claim  if  the  goods  are  lost,  destroyed,  or  damaged. 

These  three  forms  —  Bill  of  Lading,  Memorandum  Copy,  and  Shipping  Order  —  form  a 
set,  of  which  the  Bill  of  Lading  is  the  original.  The  wording  of  all  three  forms  in  the  set 
is  identical,  with  the  exception  of  the  heading.  The  conditions  are  printed  on  the  back  of 
the  forms.  The  bill  of  lading  is  illustrated  herewith  as  R.  T.  Brown  of  Philadelphia  might 
fill  it  out  for  another  shipment. 


BUSINESS    PRACTICE  — MAY 


89 


FoKM  OF  Bii.i.  OF  Lading 


Uniform  Bill  of  Lading— Stindard  farm  of  Straight  Bill  of  Lading  approved  by  ttio  Interstate  Commerce  Commission  by  Order  No.  787  of  June  27    1908. 

/'^-^?z^?^.<^-'?<-<^?-'-zz,-?^^ji-«?^  Railroad  Company. 


STRAIGHT  BILL  OF    LADING— ORIGINAL— NOT    NEGOTIABLE. 


Shippers  No. 
Agents  No. 


RECEIVED    subject   to  the  classi 


at 


v..[c  111  effect  on  ihe  date  of  i3sue  of  this  Original  Bill  o(  Lading, 

^'       72Le^  /■/, 


.10 


EpparenCK^od  order, ciccpi  asnoied  (cc 

lo  lis  usu»l  place  of  delivery  ai  s.id  de>i.Q«iioii,  if  on  iis  ro«d,  oiHennse  to  deliver  to  •noiherc»rner  on  rhe  rouie  to  said  desi-fimon.     It  Is  mutuili^  •erecil,  —  .-  v-^>. «.  ...v. 

■ny  of  said  pi^jpc.-iy  over  all  or  any  pon.on  o(  said  route  lo  destmaiion.  and  as  tu  each  pirty  at  any  lime  iniertiied  in  all  or  any  of  said  properly,  ihai  every  service  lo  be  performed  here- 
utiJer  shall  be  subifct  to  all  ihe  condiiioos,  wtieilier  prioied  or  written,  herein  contained  (ipcluding  coodiiioni  oa  bact  hereof),  and  which  are  aareed  to  by  (be  ibipper  and  iccepied  (or 
bimseir  and  bis  as»igaa. 

The  Rate  of  Freight  frow __ 


to 

is  in.  Cents  7>cr  100  Lbs.             \\      ifsmcWI 

IF  Specfil 

IF.Tliini  Isl  inn  CItu 

IF  2d  CIm 

IF  Ma  25 

IF  3d  Clisi 

IF  >iili  26 

IF   Rul,   28 

IF4tliCliss     IFSttriiss     IFGUiCliisil    ""   

por 

!                   1 

1 

II 

<tO- 

..,.<C7 

/C 

(Mail  Address — Not  for  purposes  of  Delivery.) 

Coiiiiigiied  to 
Destination.—- 
Route. — 


...State  of 

-.Car  Initial. - 


-County  cf 

_— Car  No. 


DESCRIPTION  OF  ARTICLES  AND  SPECIAL  MARKS 


WEIGHT 

(Subject  ta  Corr«et<en) 


..z.g,js:o...... 


If  charges  are  to  be  prepaid, 
write  or  stamp  here.  "To  be 
Piepaid." 


Received  S 

to  apply  in  prepajTiicnt  of  the 
charges  on  the  property  de- 
scribed hereon. 

A  geolor~(Si  aihii) '~ 


Charges   Advanced; 
S   „...„ 


_  Shipper. 


..Agent. 


(This  BJI  of  I^diog  is  to  bo  sigac<l  b/  tbc  obippcr  aod  agcal  of  the  corner  i&sumg  a 


.All  the  forms  of  a  .set  must  be  filled  out  in  precisely  the  same  way  :  that  is.  each  must  be  an  exact  duplicate 
of  the  others  as  regards  the  filling  in.     The  writing  may  be  done  w  ith  ink.  pencil,  or  carbon.     By  the  use  of 

Form  of  Mf-morandum  {Heading) 


^or  use  in  connection  with  Ibo  Shndard  form  ot  Stnlght  Bill  ol  Lading  approved  by  the  Inltrsbto  Commerce  Commission  by  Order  No.  787  ol  luno  27.  1908. 

/^^c^.i^A^^iy^iy-z^^-rL^L-ei^  Railroad  Company. 


Original  Bill  ol  Lading,  nor  a  copy  or  duplicate,  covering  the  pwperty 
named  herein,  and  is  intended  solely  for  tiling  or  tword.       


Agents  »»■ 


RECEIVED,  subject  to  the  clussif.catioru  aiij  t..rills  in  effect  on  th»  date  of  the  receipt  by  the  carrier  ol  the  property  described  in  the 
Original  Bill  ot  Lading.  ^  /)  /)       •  O^ 

at J^:^J^a^i.ix:ixJj2^^         /Z^;kz,-^.  ./..p?:, 10      , 


'l^y^Zy*^    L^'--r'i.''€Z^'''?'77^.-^^ .- tbepro«nfd«cribedb«lov.lo 

IS  noted  (coaienta  and  eooduioQ  or  conienia  of  packacca  UDLnovn),  marked,  coaaicncd  and  destined  es  lodlcaicd  belov,  which  laid  Company  afreet  to  C«iTy 
lla  usual  place  oldel.very  eii»iddeninaii..n,(foQ  irs  road. otherwise  Wdcli-erlOkootbercan-kron  .he  route  tosa.ddestlnatioo.  Il  Is  muluallr  ajietd.  as  (o  eJCh  carrier  of  all  or 
-  Ol  said  property  over  all  or  any  ponton  of  and  rou.c  .o  desiloalloo.  and  aa  W  t-cb  party  at  aor  'Iroe  loierejted  In  allor  «ur  "' "',?  P™P*"'li^;' "J'^'.t'"'^ J''  '*.ri*^!Ii«»J['fX 
ler  shall  be  auhltct  to  all  the  coocfiiioDa.  wbetbtr  printed  or  «rittea,l>er«ia  ooataiMiidocIadingcoDditlons  oa  back  berwl).  *na  "blch  •«  »pt«  l©  bribe  rtlpper  and  •cc«pie«  lof 


from 

■pDcreaigood  ord:r.cxctpi 
to  Ha  usual  place  of  delivery 


90  MODERN  ILLUSTRATIVE  BOOKKEEPING 

cirbon  paper  and  a  lead  pencil,  all  three  bills  can  be  filled  in  at  one  writing.     Many  shippers  use  rubber  stamps 
in  filling  in  parts  of  their  bills  of  lading.     (For  further  information  concerning  bills  of  lading,  see  Appendix  II.) 

Form  of  Shipping  Order  {Heading) 


For  use  in  connvclion  with  Uie  Stmtfard  lerm  of  Stnlght  Bill  of  UAiig  appr«vc4  by  Ute  Intonlals  Comncrc*  Cennluien  by  Order  No.  787  ol  June  27.  1908. 

/re^-n^^-L.4^2^.J.^/-?rt^,^.,<^^!^  Railroad  Company. 

Stlgseis  No. — 

THIS  SHIPPING  ORDER  *■■"'  ^  '<*">''  ''"*'  ''^  '"  '"''■ '"  '"<"'■'"'  f*""'.  °'  '"  c•rbo^  •»!  "   

ratalMd  br  IM  Agenl  Ijeitt    III. 


y^   .IU3CEIVK,  subject  to  the  classificatiouji  lUlil  turiflu  ilk  eiivcl  iju   Ow  uu:u  of  issuo^f  tiiia  Shipping  Onlcr, 

at...._...M^£:d.,-^.id-S^£S^l.'^^ u'Lm.'<2f.^Ly-^ 19        , 

(rem /Yr.^.^:^LC^-:JZ*r:^y^-y:Z^^iL;^. _ _ __.ib«  prepcrtr  dfMr^bc4  bele*.  l« 

•  pparcni  food  order,  OMpi  ai  soicd  (conitnts  Bod  coodiiioa  el  cvaicqit  ol  pickaps  uotaove),  marked,  conal^acd  and  drat,Bcd  aa  lodtcatcd  bclov,  vhicb  aaid  Cwmpanr  acrt«a  le  cairr 
10  in  uaual  place  oldclirrrir  ai  taid  deaiiaatloo.  If  on  lia  road,  oibrr*iM  lo  dtiircr  lo  aooibcr  earner  ea  ihc  rouie  to  aaid  dcanaaiioB.  It  la  maiuallr  acievd,  aa  to  each  cimcr  vl  all  or 
an,  of  aaid  propen,  oixr  allor  aa,  portion  of  aaid  route  to  deatiaatloo.  and  aa  lo  eacb  pan,  at  aoy  time  lotcrcated  in  all  or  aor  olaatd  prt^penj.  tkat  ercrr  aervite  to  be  parlofmed  bee*- 
under  atiall  be  aubject  to  all  tbe  coodlilooa,  vbctber  phated  or  wrlttca,  hervip  cocialaed  (locludiag  coadlliOAa  oo  fa«ck  havti,  and  vbtCh  an  aci«cd  le  k]r  ite  ablppce  kkd  Kxcpted  ft>r 
kimtelf  aod  bia  aaufna 

Ihc  liatc  of  Freight  from ^ . 


Make  out  a  set  of  the  forms  which  you  will  fiud  among  your  supplies ;  fill  them  out  at  one 
writing  by  the  use  of  the  carbon  paper.  Take  them  to  your  teacher  or  freight  agent.  He  will 
sign  and  return  to  you  the  bill  of  lading  and  memorandum  copy,  and  will  retain  the  ship- 
ping order.  Inclose  the  bill  of  lading,  with  a  bill  of  the  goods,  in  an  envelope  properly 
directed  to  Rice  &  Pond. 

Hereafter  you  must  make  out  similar  forms  whenever  merchandise  is  sold  to  out-of-town 
customers  and  sent  by  freight. 

No.  35.  —  M.w  1 8.  Write  a  check  for  $  800  and  send  it  to  ]•;.  Wcsten  Tea  &  Spice  Co., 
accompanied  by  a  letter  advising  them  of  the  remittance. 

The  Telegram  is  an  important  feature  of  modern  business,  and  is  used  very  extensively 
in  ordering  goods  for  immediate  delivery. 

The  charge  for  a  telegnim  depends  somewhat  upon  the  distance,  and.  excejit  in  the  c.ise  of  cable  messages, 
it  is  a  fi.ved  sum  for  a  ten-word  me.ssage.  with  an  additional  charge  for  each  word  in  excess  of  th-it  number,  no 
charge  being  made  for  the  name  and  address  of  tlie  person  to  whom  the  message  is  sent  or  the  name  of  the 
sender.  Night  messages,  that  is,  mess.iges  sent  at  the  convenience  of  the  Company  after  6  P.M..  are  taken  at 
about  half  the  regular  rate,  and  a  large  proportion  of  business  messages  are  of  this  kind. 

In  writing  a  telegram  care  should  be  taken  to  avoid  the  use  of  all  superfluous  words,  and  yet  the  mess.ige 
must  be  clear  and  definite,  that  mistakes  may  be  avoided.  Numbers  should  be  written  out  in  full,  since  the 
charge  is  the  same  for  a  figure  as  for  a  word  ;  for  instance,  20  written  in  figures  (20)  would  be  charged  for  as  two 
word.s,  while  written  in  full  (twenty)  would  be  charged  for  as  only  one  word.  In  sending  important  mess,ages, 
those  in  which  a  mistake  would  mean  the  loss  of  a  large  sum  of  moncy.it  is  better  in  every  case  to  have  the 
telegram  repeated;  that  is,  have  the  operator  at  the  point  to  which  the  message  is  sent  telegraph  it  back  to  the 
operator  at  the  sending  point,  so  that  the  .sender  may  know  that  his  message  has  been  received  as  it  was  sent : 
for  telegraph  operators  are  only  human,  and  mistakes  in  unrepeatcd  messages  are  by  no  means  uncommon. 
The  charge  for  repeating  a  message  is  one  half  more  than  the  original  cost. 

The  cost  of  cablegrams  is  a  certain  amount  for  each  word,  and  the  same  charge  is  made  for  the  address  and 
signature  as  for  the  words  which  make  up  the  body  of  the  message.  Business  houses  generally  have  a  code 
address  for  cablegrams  ;  that  is.  the  name  and  .address  are  represented  by  one  word  ;  for  instance.  Smith.  Jones 
&  Robinson,  42  Soho  Square,  London,  E.C.,  England,  would  be  represented  by  a  single  word,  .as  "  Extract."' 

The  following  form  of  telegram  shows  the  correct  method  of  writing  a  message  con- 
taining numbers. 


BUSINESS   PRACTICE  — MAY 


91 


THE  COMMERCIAL  TELEGRAPH  COMPANY. 

-INCORPORATED 


21.000  OFFICES  IN   AMERICA. 


CABLE  SERVICE  TO  ALL  THE  WORLD. 


PHILO   M.    BECKLEY.   Pucsidcnt  and  Gcncral   Manao^r. 


Recelver'a  No, 


^tWU    the  following  message  subject  to  the  terms 
on  back  hereof,  which  are  hereby  agreed  to. 


To 


(^^V^C<??^.-vC  (  a:A^, 


'    ,-yA^^^z^f9-7-?^i  J:  y/yl^^^  /^  1 Q 


/>-r?-t<^^^ 


Z-t^  y/Z-s?^-€^,.<i^r7-7^^/yf^.Av'^    /7^^^yr-'^J^^rp~-7--:/riy. 


-i^'^,^<?-?^ 


^-iW/       .0!^^<L-e.^<i^    y^^^^f^^J^yf  ^ 


=r 


^Jt^-r^ 


r7i3^JJy^. 


WREAD  THE    NOTICE   AND   AGREEMENT  ON    BACK.  "«» 


No.  36.  —  May  i8.  Write  a  telegram,  of  not  more  than  fifteen  worcLs,  ordering  of  West, 
Stone  &  Co.,  lo  lialf  chests  each  Japan  and  Young  Hyson  ;  lo  bales  Mocha;  15  mats  Java. 
Pay  50^  in  currency  for  the  telegram. 

Fill   out  the  telegram   blank  and   place  in  Vouchers  for   Others.     Debit  Exptiisc  for 

the   50.^. 

No.  37.  —  May  20.  E.  Mason  &  Co.,  an  out-of-town  firm,  have  sent  you  this  order  for 
goods.  They  refer  to  your  own  bank,  and  the  reference  being  satisfactory,  Mr.  Adams 
instructs  you  to  fill  the  order. 

Make  out  the  bill,  also  the  bill  of  lading,  following  instructions  given  under  No.  34. 
Inclose  invoice  and  bill  of  lading  in  an  envelope  properly  addressed.  On  the  invoice  and 
in  the  sales  book  give  the  terms  as  30  das.  sight  draft. 

No.  38.  —  M.AY  20.     Pay  this  painter's  bill  by  check. 

Painting  comes  under  the  head  of  permanent  repairs  to  your  real  estate.  Make  the 
proper  cash  book  entry  (rule  22,  page  82). 

No.  39.  —  May  20.  Dickson  &  Young  have  given  their  note  at  60  days  for  $400,  on 
account,  and  at  the  same  time  have  ordered  more  goods.     Fill  the  order. 

Place  the  note  in  your  Cash  Drawer,  make  out  the  bill,  and  make  the  proper  entries. 

No.  40.  —  May  21.     Fill  Vincent's  order. 

In  this  transaction  you  are  to  receive  the  cash  on  delivery  of  the  goods,  which  are  to  be 
sent  by  express.  This  is  known  as  C.  O.  D.  by  express.  Make  out  a  regular  bill  of  the 
goods  for  James  H.  Vincent.     Inclose  an  abstract  of  this  bill  in  a  C.  O.  D.  envelope  which 


92 


MODERN   ILI.ISTKATIVK   liOOKKEliPIXG 


you  will  find  among  your  sui)i)lies  ;  the  abstract  of  bill  should  read,  Mdsc.  as  per  bill  for- 
warded, and  should  give  the  total  amount.  On  the  front  of  the  C.  O.  D.  envelope  write  the 
address  of  H.  F.  Adams.  On  the  back  write  the  amount  of  the  invoice  in  the  blank  space 
for  that  purpose ;  write  No  opposite  Cligs.  for  Return  of  Money ;  and  write  the  amount  of 
the  invoice  again  on  the  following  line.  Farther  down  on  the  back,  in  the  proper  spaces, 
write  the  date  of  shipment  and  the  address  to  which  the  goods  are  to  be  sent.  Place  the 
envelope  with  inclosures,  unsealed,  in  Vouchers  for  Others ;  in  business  it  would  be  de- 
livered, together  with  the  goods,  to  an  agent  of  the  e.xpress  company.  The  company 
delivers  the  goods  to  the  consignee,  after  collecting  the  amount  called  for  on  the  bill  plus 
express  charges.  The  agent  of  the  express  comjiany  receipts  the  abstract  of  bill  and  gives 
it  to  the  consignee. 

Make  an  entry  in  the  sales  book  as  follows  : 


T^ 


z/ 


Jo  A 
zo^\ 


£ 

lA 


/  o 


Post  to  your  ledger,  opening  a  C.  O.  D.  account  in  the  section  of  your  ledger  reserve' 
for  accounts  receivable.     The  followinsr  is  the  form  of  a  C.  O.  D.  account. 


2-7 


%r 


/  C? 


^ 


yj/a^-?:,-: 


I      i 


^ 


/  rd-(; 


I 


h  "t 


Every  C.  O.  D.  sale  should  be  posted  to  this  account,  and  the  name  of  the  person  to 
whom  the  goods  are  sent  should  be  written  in  the  explanation  space.  The  posting  should  be 
done  immediately  after  the  sale  is  entered  in  the  sales  book. 

When  the  returns  are  received  from  the  express  cortipany,  an  entry  is  made  on  the  debit 
side  of  the  cash  book,  and  from  there  the  item  is  posted  to  the  credit  side  of  C.  O.  D. 
account  in  the  ledger,  as  illustrated  above.  Note  that  each  credit  should  be  placed  on  the 
line  with  the  corresponding  debit. 

Some  business  houses  enter  C.  O.  D.  sales  in  a  special  liook  kept  for  that  purpose,  and  do  not  carry  tliem 
into  the  main  books  until  the  returns  have  been  received.  Then  they  enter  tlie  cash  in  the  cish  book,  crediting 
Merchandise. 

No.  41.  — Mav  21.  1  lave  the  bank  discount  the  note  of  Dickson  &  Young  received  May 
20th. 

Proceed  as  in  transaction  No.  i8.  Take  the  note  and  discount  memorandum  to  the  bank, 
where  you  will  receive  credit  for  the  net  proceeds. 


BUSINESS   PRACTICE— MAY  93 

No.  42.  —  May  22.  Make  a  bill  of  the  goods  called  for  in  this  order  from  Rice  &  Pond, 
checking  items.  File  the  order.  Enter  the  sale  in  sales  book,  place  the  check  received 
on  account  in  the  Cash  Drawer,  and  make  the  proper  entry.  Acknowledge  the  receipt  of 
the  check  by  letter. 

No.  43.  —  May  23.  This  invoice  is  for  goods  ordered  from  West,  Stone  &  Co.  by  tele- 
graph May  18th.     \'erify  and  enter. 

No.  44.  —  May  23.  You  have  made  this  purchase  of  Chas.  K.  Fox,  City,  to  supply 
immediate  needs.     Verify  and  enter. 

No.  45.  —  May  23.  Sold  G.  II.  Thomas,  for  cash,  a  sample  lot  of  75  lbs.  Maracaibo  at 
18]  ^  and  25  lbs.  Rio  at  I4l-  f. 

Do  not  enter  this  in  the  sales  book,  as  it  is  not  for  a  regular  customer,  but  carry  it  direct 
to  the  cash  book,  gvvmg  Merchandise  credit  in  that  book.  Make  a  memorandum  of  the  sale 
on  a  slip  of  paper,  and  place  it  in  your  Vouchers  for  Others. 

In  any  wholesale  house  there  will  be  a  few  of  these  petty  sales.  They  are  not  entered  in  the  sales  book 
but  carried  direct  to  the  cash  book. 

No.  46— M.\Y  23.  SIXTH  REPORT.  Pencil  foot  the  cash  book  up  to  this  date. 
Make  a  report  and  take  all  papers  to  your  teacher  for  approval.  Do  not  balance  your  cash 
book,  but  see  that  the  cash  balance  on  your  report  agrees  with  the  amount  of  cash  in  your 
Cash  Drawer,  plus  your  bank  balance,  and  also  that  this  amount  is  the  same  as  the  differ- 
ence between  the  two  sides  of  your  cash  book. 

No.  47.  —  May  24.  The  express  company  has  returned  the  collection  of  May  21  in  the 
form  of  an  express  money  order.  It  collected  $  10  from  Vincent  for  you,  but  it  retains  25  ^ 
as  its  charge  for  returning  the  money ;  so  the  order  is  for  $9.75. 

In  actual  business,  this  money  order  would  be  received  by  mail  in  tlie  envelope  you  filled  out  in  No.  40 ;  and 
on  the  envelope  would  be  noted  tlie  charge  of  2^f  for  return  of  money. 

On  the  debit  side  of  the  cash  book  write  in  the  first  wide  column  C.  O.  D.,  in  the  ex- 
planation space  _/rti-.  H.  Vincent,  and  in  the  money  column  10.  Post  the  $  10  at  once  to  the 
credit  of  C.  O.  D.  account  as  explained  and  illustrated  on  the  preceding  page.  On  the 
credit  side  of  the  cash  book  debit  Expense  for  the  return  charge,  25/.  Put  the  express 
money  order  in  your  Cash  Drawer. 

Some  shippers  require  the  purchaser  to  pay  the  charges  for  the  return  of  amount  collected.  In  that  case  the 
word  Add  is  written  before  digs,  for  Return  of  Money  on  the  C.  O.  D.  envelope  when  it  is  filled  out. 

No.  48.  —  May  24.  Send  a  telegraphic  message  of  not  more  than  15  words  to  L.  Hennes 
&  Co.,  New  York,  ordering  12  bags  Maracaibo  coffee,  12  half  chests  Oolong  tea,  and  5  cases 
Ceylon  tea,  to  be  sent  by  fast  freight.  Pay  35)^  for  the  telegram;  also  pay  for  having 
windows  cleaned,  S  1.50.     Place  this  money  in  Cash  Paid  Out. 

No.  49.  —  May  24.  Fill  this  order  from  A.  A.  Knowles  &  Co.,  which  is  received  with  a 
note  to  apply  on  account. 

Place  the  note  in  your  Cash  Drawer,  and  file  the  order.  Write  a  letter  of  acknowledg- 
ment for  the  note,  place  it,  with  the  invoice,  in  an  envelope  properly  addressed,  and  put  in 

your  Vouchers  for  Others. 

No.  50.  —  M.\Y  25.  Deposit  the  check  you  received  from  F.  C.  Tenney,  May  15th,  and 
Rice  &  Pond's  check  of  May  22d;  also  the  $9.75  express  money  order  and  S  100.25  cur- 
rency.    Also  discount  the  note  of  $600  received  from  A.  A.  Knowles  &  Co.  yesterday. 

Calculate  the    discount  and  find  the  net  proceeds.     Make  out  discount  memorandum 


04  MODERN   ILLUSTRATIVE  BOOKKEEPING 

and  deposit  slip ;  treat  the  money  order  like  a  check.  After  entering  the  deposit  slip  on 
left-hand  page  of  check  stubs,  take  the  deposit  slip,  the  checks,  the  express  money  order, 
the  currency,  the  note  properly  indorsed,  the  discount  memorandum,  and  your  bank  pass 
book  to  the  bank  teller,  who  will  give  you  credit  for  the  deposit  and  for  the  net  proceeds  of 
the  note.  Do  not  fail  to  enter  these  amounts  on  the  stub  of  your  check  book.  Make  the 
proper  cash  book  entry.     (See  transaction  i8,  page  82.) 

No.  51.  —  Mav  25.  W'rite  a  check  for  S700  and  mail  it,  with  letter,  to  E.  Westen  Tea 
&  Spice  Co.,  to  apply  on  account. 

No.  52.  —  May  26.  This  invoice  is  received  from  L.  Hennes  &  Co.,  in  response  to 
your  telegram  of  May  24th.     Verify,  enter,  and  file. 

No.  53.  —  M.\Y  26.  Fill  this  telegraphic  order  from  E.  Mason  &  Co.  Make  the  terms 
30  days,  YiQ.     Check  off  each  item,  and  place  the  telegram  in  your  Voucher  File. 

No.  54.  —  May  26.  Pay  the  invoice  purchased  of  Chas.  K.  Fo.\-,  May  23d,  by  check, 
less  3  7c. 

No.  55.  —  May  26.  This  order  comes  from  S.  E.  Kingsley,  a  stranger,  and  as  you 
know  nothing  of  his  standing  you  may  fill  the  order  and  send  as  directed,  C.  O.  D.  Make 
the  terms  C.  O.  D.  less  3  %,  and  write  him  that  if  references  prove  satisfactory,  you  will  be 
pleased  to  ojicn  an  account  with  him.  Take  off  3  %  for  cash  on  the  bill,  but  enter  in  the 
sales  book  for  the  full  amount.  Post  at  once  from  sales  book  to  C.  O.  D.  account  (.see 
No.  40). 

No.  56.  —  May  28.  Fill  this  new  order  from  ¥..  Mason  &  Co.  as  requested.  Make  the 
terms  30  days,  ^/-^n- 

What  do  you  do  with  the  order.''     What  with  the  bill.' 

No.  57.  —  May  28.     This  purchase  is  made  of  Chas.  K.  Fox,  City,  on  account. 
What  do  you  do  with  the  jnvoice.''     (Compare  with  No.  5,  page  76.) 

No.  58.  —  May  28.  C.  O.  D.  to  S.  E.  Kingsley  sent  May  26  has  been  returned.  There 
are  two  orders  because  express  money  orders  are  not  made  for  more  than  S  50.  The  total 
amount  is  only  S  86.80,  instead  of  S  87.30,  because  the  express  company  retains  50 f'  for 
return  charge. 

Credit  C.  O.  1).  on  the  debit  side  of  the  cash  book  for  the  full  amount  of  the  bill  before 
the  discount  was  deducted.  On  the  credit  side  of  the  cash  book,  debit  Merchandise  Discount 
for  the  3  %  discount,  and  in  the  explanation  space  write  C.  O.  D.,  S.  E.  Kingsley. 

What  entry  do  )ou  make  for  the  50^'.'     (See  No.  47.) 

No.  59.  -  Mav  29.  The  goods  listed  in  this  invoice  have  been  purchased  of  West,  Stone 
&  Co.,  by  Mr.  Adams. 

No.  60.  — May  29.     Send  a  check  for  i^SOO  to  Shields  Bros.,  to  apply  on  account. 

No.  61.  — May  30.  The  City  Carting  Company  have  paid  your  freight  bills  and  deliv- 
ered goods  which  you  have  purchased,  and  now  present  their  bill  for  the  month,  which  you 
will  pay  by  chock.     Enter  in  the  cash  book  (see  rule  13,  page  27). 

No.  62.  —  May  31.  Your  own  salary  for  the  month  is  S  75,  for  which  you  may  write  a 
check  ;  also  write  a  check  for  $45,  favor  of  R.  E.  Leavitt,  clerk. 

No.  63.  —  May  31.  H.  F.  Adams  has  given,  as  a  personal  gift  to  the  city  mission,  20  lbs. 
Young  Hyson  tea,  10  lbs.  Japan  tea,  10  lbs.  of  English  Breakfast  tea.  Charge  him  with 
these  goods  at  the  cost  price.     Enter  in  the  sales  book. 


POSTING  — MAY  95 

No.  64.  —  May  31.  You  have  received  a  note  for  $  700  at  10  days,  with  interest,  from 
A.  W.  McKey,  for  which  you  will  give  him  credit.  See  that  the  note  is  correctly  written  and 
place  it  in  your  Cash  Drawer.     (No  entry  for  interest.) 

No.  65.  —  May  31.  Deposit  express  money  orders  and  all  cash  in  your  bank.  Have 
your  bank  book  written  up,  and  see  that  your  balance  agrees  with  the  balance  as  shown  on 
the  stub  of  your  check  book. 

No.  66.  —  May  31.  SEVENTH  REPORT.  Prepare  your  report  and  hand  in  all  vouch- 
ers for  approval.  After  your  report  has  been  O.K.'d,  balance  your  cash  book  and  sec  that 
the  cash  balance  as  shown  by  the  cash  book  agrees  with  the  bank  balance  as  shown  on  the 
stub  of  your  check  book. 

POSTING 

Post  from  all  your  books  to  the  ledger  and  check  your  postings.  If  in  doubt  in  regard 
to  the  posting,  review  pages  86-88.  Be  sure  that  the  total  of  the  sales  book  is  carried  to 
the  credit  of  Merchandise.  After  reading  carefully  pages  Gj  and  68,  make  out  your  monthly 
statement  to  each  customer.     Take  a  trial  balance  of  differences  only. 

Inventories 
Merchandise  unsold : 

26  hf.  chts.  Oolong,  1 300  lbs.,  48)^ 

18    "       "      Young  Hyson,  1260  lbs.,  33^ 

18    "       "      E.  Breakfast,  1080  lbs.,  31^ 

25  "  "  Japan,  1500  lbs.,  23^ 
15  cases  Ceylon,  750  lbs.,  35  i 
12  bales  Mocha,  1800  lbs.,  23)^ 

26  mats  Java,  1950  lbs.,  22^' 
1575  lbs.  Maracaibo,  1 1  0 

650  lbs.  Rio,  10^ 

34  boxes  W.  Pepper,  340  lbs.,  23^ 

24      "       Cinnamon,  240  lbs.,  ijf 

26      "      Cloves,  260  lbs.,  14^ 

9      "      Ginger,  90  lbs.,  22^ 

8  pails  Ginger,  200  lbs.,  22^' 

1 10  lbs.  Nutmegs,  60^ 

Office  furniture  and  fixtures  are  valued  at  109^  less  than  cost. 

Office  book.s,  stationery,  and  unexpired  insurance  are  valued  at  ^598.75. 

Your  real  estate  is  valued  at  cost,  as  shown  by  the  debit  side  of  your  ledger  account. 

Calculate  the  amount  of  your  inventories  of  Merchandise  and  Furniture  and  Fixtures 
and  present  to  your  teacher  for  approval.  Write  all  _\our  inventories  at  the  proper  place  in 
Blank  No.  i. 

STATEMENTS 

Prepare  business  and  financial  statements,  according  to  instructions  below.  In  your 
business  statement,  you  should  include  Merchandise  Discount,  Discount,  and  I-'urniture  and 
Fixtures,  besides  accounts  previously  included.  In  the  financial  statement,  you  should  in- 
clude inventories  of  Merchandise,  Furniture  and  Fi.xtures,  and  Expense  among  the  resources. 


96 


MOUEKN  ILLUSIRATIVE  BOOKKEEPING 


\^i-uU'-p^^-<d.<dy- 


1  yAi-t^^J-^^,  ^  r , 


'A 


■^z-^^^ 


7- 


In  the  previous  work  the  student  has  prepared  simple  forms  of  business  and  financial 
statements,  designed  to  help  in  making  clear  the  fundamental  principles  of  bookkeeping. 
Now  that  the  student  has  taken  up  the  study  of  practical  bookkeeping,  he  may  prepare 
statements  in  the  forms  shown  above  and  on  pages  lOO,  lOi,  which  are  the  forms  commonly 
used  by  ex])erienced  accountants  and  auditors. 

Form  of  Business  Statement.  —  The  business  statement,  or  statement  of  losses  and  gains, 
is  closed  in  two  sections.  The  first  section  is  really  an  abstract  of  Merchandise  account ; 
it  shows  details  of  the  gain  or  loss  on  Merchandise  account  onl)'.  The  second  section  is 
a  statement  of  the  losses  and  gains  of  the  business  proper.  It  shows  the  amount  of  gain 
or  loss  from  Merchandise  account,  the  expenses  of  the  business,  gains  or  losses  other  than 
from  Merchandise  account,  such  as  from  Merchandise  Discount,  and  finally  the  net  gain  or 
loss  of  the  business  as  a  whole. 

If  there  are  transactions  in  stocks  and  bonds,  or  anything  else  outside  of  the  business  proper,  the  gain  or 
loss  on  such  transactions  should  be  shown  iu  a  tliird  section  of  the  statement. 

On  the  debit  side  of  the  first  section  of  the  business  statement,  we  have  (i)  merchandise 
on  hand  at  the  close  of  last  month  ;  (2)  cost  of  merchandise  during  the  month.  These  two 
items  are  entered  in  the  first  column,  added,  and  their  sum  extended  into  the  second  column. 
In  the  above  model  statement  there  was  no  merchandise  on  hand  at  the  close  of  last  month, 
hence  there  is  no  amount  after  this  item. 

On  the  credit  side  of  the  business  statement  in  the  first  section,  we  have  (3)  amount  of 
merchandise  sales  during  the  month ;    (4)  merchandise  now  on  hand,  as  per  inventory. 


STATEM  KN  I'S  —  MAY 


■^V,/f- 


[•v'2iz:z-=^-,«<  _-£^:-az-<ik«/ .szi^^^-i^^i^^^zSC^  C^i>i7 


et!^^n^^f^^ 


n^^ri^.^ 


The  amounts  of  these  two  items  are  entered  in  the  first  cohimn,  and  their  sum  extended  into 
the  second  column. 

It  is  evident  that  the  difference  between  the  amount  of  merchandise  on  hand  in  the 
beginning  of  the  month  plus  the  amount  purchased  during  the  month,  and  the  amount  of 
merchandise  sold  during  the  month  plus  that  on  hand  at  the  end  of  the  month,  will  be  the 
loss  or  gain  on  merchandise.  In  the  above  statement  the  gain  is  found  to  be  $1440,  and  the 
amount  is  written  after  Gain  carried  dtnvn,  in  red  ink,  on  the  debit  side. 

In  the  second  section  of  the  business  statement  we  have,  on  the  debit  side  (6)  the  total 
cost  of  e.xpense  ;  (7)  the  amount  of  unexpired  insurance  and  stationery,  which,  paid  for 
under  expense,  has  not  yet  been  used;  the  difference  between  (6)  and  (7),  extended  into 
the  second  money  column  as  the  loss  on  expense;  (S)  the  loss  on  discount;  (9)  the  loss  on 
furniture  and  fixtures  on  account  of  depreciation  in  value. 

In  the  second  section  of  the  business  statement,  on  the  credit  side,  we  have  (10)  the  gain 
on  merchandise,  which  is  written  after  Gain  brought  down  (that  is,  this  gain  is  brought 
down  from  the  first  section);  and  (i  i )  the  gain  on  merchandise  discount.  The  difference 
between  the  sum  of  the  debit  amounts  and  the  sum  of  the  credit  amounts  will  show  the  net 
gain  of  the  business.  The  net  gain  is  written  in  red  ink  on  the  debit  side  of  the  state- 
ment (12). 

When  the  proprietor  examines  the  above  statement,  he  can  tell  at  a  glance  the  amount 
of  merchandise  purchased  during  the  month,  the  amount  of  sales,  the  amount  on  hand,  his 
gain  on  merchandise,  and  his  net  gain  on  the  business  as  a  whole. 


98  MODERN   ILLUSTRATIVE   BOOKKEEPIXG 

If  he  has  purchased  and  sold  stocks  and  bonds,  bank  stock,  real  estate,  or  anything  of  this  character,  the  re- 
sult of  such  tnmsactions  would  be  shown  in  a  third  section  of  the  business  statement.  In  this  case  the  net  gain  of 
the  second. section  would  be  the  net  gain  of  the  business  proper,  and  this  would  be  carrietl  down  to  the  third 
section.  The  ditTercnce  between  the  two  sides  of  the  third  section  would  be  the  net  gain  or  loss  on  his  entire 
transactions. 

A  business  might  be  paying,  and  the  proprietor  still  be  losing  money  on  account  of  losses  sustained  by  out- 
side transactions.  The  profit  on  merchandise  might  be  sufficient,  and  still  the  business  be  conducted  at  a  loss, 
on  account  of  enormous  expenses.  For  this,  and  various  other  reasons,  it  is  essential  that  the  loss  and  gain 
statement  should  be  closed  in  sections,  so  that  the  proprietor  may  determine  at  a  glance  the  exact  condition  of 
his  business. 

How  to  Make  out  Your  Business  Statement  for  May.  —  The  following  paragraphs  are 
numbered  to  correspond  with  the  numbers  before  the  items  in  the  statement  on  pages  96 
and  97.  These  numbers  indicate  the  order  in  which  the  various  items  are  to  be  j)laced  on 
the  statement,  but  the  stitdcnt  should  omit  them  in  making  out  his  statement. 

1.  Turn  to  the  merchandise  account  in  your  ledger.  As  this  is  the  beginning  of  the 
business,  there  was  no  merchandise  on  hand  at  the  beginning  of  the  month,  hence  nothing 
will  be  written  after  J\Tc)xluindisc  on  luind  at  the  elose  of  last  month,  but  you  may  write  these 
words  in  your  business  statement  (see  model,  page  96). 

2.  The  sum  of  the  items  on  the  debit  side  of  your  Merchandise  account  in  your  ledger 
represents  the  cost  of  merchandise  during  the  month.  Write  the  amount  'Ai\.cx  Merchandise, 
cost  of,  during  the  month. 

3.  The  sum  of  the  items  on  the  credit  side  of  your  Merchandise  account  represents  the 
amount  of  merchandise  you  have  sold  during  the  month.  Place  the  amount  after  Merchan- 
dise sales  du7-ing  the  vionth  (see  model,  page  97). 

4.  Write  the  amount  of  your  inventory  after  Merchandise  on  hand  no7i'. 

5.  Find  the  difference  between  the  sum  of  the  items  on  the  debit  side  and  the  sum  of 
the  items  on  the  credit  side  of  your  business  statement,  and  write  this  difference,  in  red  ink, 
after  Gain  carried  doivn  on  the  debit  side  of  your  business  statement  in  the  second  column, 
after  which  rule  and  foot  the  first  section  of  your  business  statement,  as  in  the  model. 

6.  Write  the  total  cost  of  expense,  as  shown  by  your  trial  balance,  after  Expense,  cost  for 
the  month. 

7.  KiXxx  Less  inventory  of  unexpired  insurance  and  stationery,  write  the  amount  of  your 
expense  inventory.  Subtract  this  from  cost  of  expense,  and  extend  the  difference  into  the 
second  column  (see  model,  page  96). 

8.  After  Discount,  write  the  amount  of  the  loss  on  discount,  as  shown  by  your  trial 
balance. 

9.  A  depreciation  of  10%  has  been  allowed  for  wear  and  tear  on  office  furniture. 
Write  the  amount  of  this  depreciation,  which  is  a  loss  to  the  business,  opposite  Furniture 
and  Fixtures,  under  the  heading  Depreciation  as  under:  (see  model). 

10.  Bring  down  the  amoimt  of  the  gain  shown  in  the  first  section  of  the  business  state- 
ment, and  write  it  under  Gain  brought  down  in  the  second  section. 

U.  After  Merchandise  Discount,  write  the  gain  on  merchandise  discount,  as  shown  by 
your  trial  balance. 

12.  I-"ind  the  difference  between  the  sum  of  the  items  on  the  debit  side  and  the  sum  of 
the  items  on  the  credit  side  of  your  business  statement,  and  write  the  amoimt,  in  red  ink, 
after  Ket  Gain.     Rule  and  foot  the  second  section  of  your  statement,  as  in  the  model. 

Form  of  Financial  Statement.  —  A  financial  statement,  or  balance  sheet,  should  begin 
with  the  most  available  resource.  Cash.     The  amounts  of  cash  in  safe  and  in  bank  arc  writ- 


STATEMENTS  — MAY  09 

ten  separately  in  the  first  column,  and  their  sum  in  the  second  column  (see  model,  pages 
loo  and  loi ). 

Various  kinds  of  property  owned  by  the  business  are  next  listed  under  the  title,  Prop- 
erties as  under:  Real  estate,  in  the  model,  is  listed  at  its  ledger  valuation,  on  the  pre- 
sumption that  it  is  worth  at  the  present  time  the  amount  paid  for  it.  Naturally  there  has 
been  wear  and  tear,  or  depreciation,  upon  office  furniture  and  fixtures  :  their  cost  is  shown 
in  the  first  column  ;  under  this  is  written  the  amount  charged  off  for  depreciation ;  and  the 
difference,  or  present  value  of  the  furniture  and  fixtures,  is  extended  into  the  second  column. 
Goods  on  hand  are  inventoried  usually  at  their  cost  price,  and  the  amount  is  written  in  the 
second  column.  If  there  is  any  property  on  hand  which  was  charged  to  Expense  when 
bought,  it  is  considered  a  resource  inventory  and  listed  in  the  second  column. 

The  next  title,  Sundry  trade  debtors  as  under,  covers  all  amounts  owing  the  business  by 
firms  and  individuals.  The  amount  of  notes  held  is  written  after  Bills  Receivable,  and  the 
amount  due  the  business  on  personal  accounts  is  written  after  Open  book  accounts  considered 
good.  Usually  an  amount  is  deducted  from  Open  book  accounts  as  a  reserve  for  bad  debts. 
Open  book  accounts  are  also  frequently  divided  into  two  classes  —  Open  book  accounts  consid- 
ered good  dcnd  Open  book  accounts  considered  doubtful.  In  connection  with  this  statement, 
it  is  customary  to  make  out  a  list  of  all  debtors  and  creditors  of  the  business. 

If  there  were  any  other  assets,  they  would  be  enumerated  in  detail  on  the  debit  side  of 
the  financial  statement. 

The  liabilities  are  written  on  the  credit  or  right-hand  side  of  the  statement.  The  first 
title,  Sundry  trade  creditors  as  under,  covers  all  persons  or  firms  whom  the  business  owes, 
either  on  note  or  on  account.  The  amount  owed  on  notes  is  written  after  Bills  Payable. 
The  amount  owed  on  personal  accounts  is  written  after  Open  book  accounts.  If  the  busi- 
ness had  other  liabilities,  they  would  be  here  enumerated.  The  sum  of  the  liabilities  is  writ- 
ten in  below  a  red  line,  as  shown  in  the  model. 

The  amount  the  proprietor  has  invested  in  the  business  is  next  written  down  in  the  first 
column,  and  from  this  is  subtracted  the  sum  of  his  withdrawals.  To  the  remainder  is 
added  the  net  gain  from  the  business  statement,  and  the  sum  is  extended  to  the  second 
cohnnn,  in  red  ink,  after  the  title,  Present  worth  of  business. 

Notice  the  footings  and  ruling  of  the  model. 

A  financial  statement,  or  balance  sheet,  made  out  as  above,  will  show  in  classified  form 
the  actual  assets  (resources)  and  liabilities  of  the  business.  The  proprietor  of  a  business,  in 
examining  such  a  balance  sheet,  can  tell  at  a  glance  the  amount  of  property  he  has  on  hand, 
and  the  basis  of  its  valuation  ;  for  the  statement  shows  any  amount  that  has  been  charged  off 
for  depreciation,  or  anything  that  has  been  added  on  account  of  an  increase  in  value. 

How  to  Make  out  Your  Financial  Statement.  —  Follow  the  style  of  the  model  on  pages 
lOO,  lOi,  inserting  the  headings  as  you  reach  them.  The  following  paragraphs  are  num- 
bered to  correspond  with  the  numbers  in  the  model.      Do  not  write  these  numbers. 

1.  Ascertain  the  amount  of  cash  in  the  safe  or  drawer,  and  write  it  in  the  first  cohuim 
after  Cask  in  safe. 

2.  Ascertain  fiom  your  check  book  the  amount  of  cash  in  bank,  and  write  it  after  Cask 
in  bank.  The  amounts  of  cash  in  bank  and  in  safe  should  be  addeil,  and  written  in  the 
second  money  column  of  the  statement  (see  model,  page  lOO).  The  amount  of  cash  shown 
by  the  statement  should  be  the  same  as  that  shown  on  the  trial  balance. 

3.  Ait^r  Real  Estate,  Ledger  valuation  write  the  amount  of  real  estate  (512,125),  as 
shown  bv  your  t  ial  balance,  in  the  second  column  ot  your  statement. 


100 


MODEIO*"   ILLLSTRATlVlL   BOOKKEEPING 


K^jrty'^7..'€Zy9'l^'C-C-t^l^-^2Z^^i^^ 


4  •^^:^^U^i^i.f^~^,.^i'€^'L■^^  K^^^ti«^5e>£.^£-</ 


'-■^fl^ 


/ZOO 


9  (Jil^^!-^^^t^'-A:fV^  fZ-€>0^,  c-&-^^J^<~^t:^i^yC■^^^■^rv^ 


t 


Z  Z'^O 


^ff 


JJ^JZ^/J^ 


4-  Find  the  amount  charged  to  Furniture  and  Fixtures,  as  shown  by  your  trial  balance 
(S231),  and  write  it  after  Funittiitr  and  Fixtures  in  the  first  money  column  of  your  state- 
ment. 

5.  A  depreciation  of  10  %  is  allowed  on  furniture  and  fixtures.  Write  the  amount  of 
depreciation  (S  23.10)  after  Less  depreciation,  subtract  this  amount  from  the  amount  of 
furniture  and  fixtures,  and  e.xtcnd  the  difference  to  the  second  column  of  your  statement. 

6.  Write  the  amount  of  the  inventory  of  merchandise  after  the  proper  title,  in  the 
second  column.  You  should  write  Mr.  Adams's  name  in  place  of  Mr.  White's,  as  the  value 
of  the  merchandise  is  estimated  by  him. 

7.  Write  the  inventory  of  expense  (S98.75)  after  the  proper  title. 

8.  Write  in  the  i)roper  place  the  amount  of  bills  receivable,  as  shown  by  your  trial 
balance. 

9.  Find  the  sum  of  the  amounts  owing  the  business  on  account  by  different  persons, 
as  shown  by  your  trial  balance,  and  write  it  after  Open  book  accounts  considered  good.  The 
persons  who  owe  H.  F.  Adams  are  A.  A.  Knowles  &  Co.,  Dickson  &  Young,  A.  W. 
McKey,  F.  C.  Tenney,  F.   H.   Randall  &  Co.,  Rice  &  Pond,  and  E.   Mason  &  Co. 

10.  Next  come  the  liabilities.  Write  the  amount  of  bills  payable,  Siiown  by  your  trial 
balance,  in  the  proper  place. 

11.  Find  the  sum  of  the  amounts  that  II.  V.  .\dams  owes  different  pi^rsons  on  account, 
as  shown  by  your  trial  balance,  and  write  this  sum  after  Open  book  accounts.     Find  the  sum 


STATEMENTS  —  MAY 


101 


y^^-n.^e^'in.-r, 


^^: 


j/,/f- 


iX-.d^^C^^f-Z'Cliii.^^.- 


13  .*'  // 


z-^:-i?2^ 


15  —Z^?U..^-€^^?-2-^...'C<^c>-t^^^^  i;^c--z:^-i,«^^>^-2-^<^^ 


^fCi^ 


/  /pa 


7^ 


<rC\f^i2 


'3^3  2.  /  ^ 


of  vour  open  book  accounts  and  bills  payable,  and  write  the  amount  below  a  single-ruled 
line,  as  shown  in  the  model. 

12.  Show  the  amount  of  H.  F.  Adams's  investment  in  the  style  of  the  model.  The 
amount  of  his  investment  will  be  the  total  of  the  amounts  on  the  credit  side  of  H.  F. 
Adams's  account  in  the  ledger. 

13.  Write,  as  the  amount  of  H.  F.  Adams's  withdrawals,  the  sum  of  the  amounts  on 
the  debit  side  of  his  account  in  the  ledger.  Subtract  the  withdrawals  from  the  amount  in- 
vested, and  write  the  difference,  which  is  the  net  investment,  below  a  single-ruled  line  (see 
model). 

14.  Underneath  the  net  investment  write  the  amount  of  the  net  gain,  as  shown  by  your 
business  statement. 

15.  Add  the  net  gain  to  the  net  investment,  and  write  the  amount  in  red  ink  after 
Present  worth  of  business,  in  the  second  money  column.  Rule  and  foot  your  financial 
statement  as  indicated  in  the  model. 


CLOSING    THE    LEDGER 

Hand  your  business  statement  and  your  financial  statement  to  your  teacher  for  ap- 
proval. If  they  are  correct,  close  your  ledger,  and  hand  in  all  your  books  to  your  teacher 
for  examination. 


102 


MODERN  ILLUSTRATIV'E  BOOKKEEPING 


I'ricf.  Lists  for  May  and  June 


Jajjan  .     .  .  . 

Oolong    .  .  . 

;1 

Ceylon     .  .  '. 

Y.  Hyson  .  . 
ICng.  Hreakfast 

iMocha      .  .  . 

Java     .     .  .  . 

Maracaibo  .  . 

Kio      .     .  .  . 

\V.  Popper  .  . 

Cinnamon  . 

Cloves      .  .  . 

Nutmegs.  .  . 

Ginsrer     .  .  . 


lie.  Cli. 
(( 

Case 
Hf.  Ch. 

Bale 
Mat 
Bag 


Box 
I'ail 
Box- 
Pail 
Box 
Pail 


lbs. 
60 

5° 
53 
70 
60 
150 

75 
125 
12; 


-3 
10 


Box 
Pail 


10 
=5 


.40 

•55 
.60 

•35 
•50 
•25 
.28-; 
.18' 
■14' 
•30 
•35 
.20 
.70 
•30 


•38 
.60 


•37 
.61 


.58    .55 


•37 

.38 

•45 

•44 

.25= 

.24 

•25 

.2s- 

.18 

•19' 

.18 

•17- 

•3'-^ 

.29 

•36 

.33 

.18^    .21 
.69      .72 

•32  I  ^35 


36 
62 

65 
39 

43 
24' 

26''| 

19 
l6'^ 
28 
34 

22 

71 


6 


26 
66 
50 
49 
39 
25- 

30 

8 

13 
33- 
38 
i62 

67 
40 


8 


.41 
.72 
•53 
•34 
•33 
•24- 
.30- 
.19 

.  1 2-\ 
•30 

•33 
.20 

.72 

■37 


35 
70 

55 
40 

35 
27 
29-- 

13- 

33 

32 

"7 

73 

35 


9 


•34 
•7« 
•45 
.41 

•34 
.28= 

•27- 
•15 
••5= 
.32 

•35 
.18 

.70 
•45 


10 


•39 
•56 
.40 
.36 

•49 

.29 

.26 

.14= 

•J7 

•30' 

•39 


11 


•24 
.63 
•57 
•5' 
■4= 
•30 
.27 

•13'- 
.16 


12 

•25 
.62 
.56 
.50 

•43 
•32 

•24' 
.112 
.18'^ 


.66 
.50 


26-  .28 

•34 

.22 

•71 


37 
19=1  .23-= 
.68 

■33  '  ^34 


13 

•30 
•57 
•59 
•45 
.48 
.28 
.24 

•'5' 

.19 

.29 

•34^ 
.21 
.70'' 
•3i 


The  small  index  figures  used  in  the  above  price  lists  indicate  ••  fourtlis.' 
25"  equals  25J. 

Price  Lists  for  June 


25'  equals  25J.     25- equals  25J. 


Hour,  Northern  Star      .     . 

"       Searchlight  Pastry  . 

"       Graham 

II.  O.  Buckwheat.  .  .  . 
Oatmeal,  Pawnee  .... 

Quaker  R.  O 

Sugar,  Granulated     .     .     . 

Rice 

Corn 

Tomatoes 

Beans,  Lima 

Soap,  Ivory 


lbs. 


Brl. 


Case 


Brl. 

Case 

Brl. 

Doz. 

tc 

Box 


4.08 


4.10 


4.58 
2.90 
3.20 


4.60 
1.85 
3-25 

+35 1  4^3° 
3^49,  3^54 
300    .055  .05  i 


4.12:4.14 
4.56,  4.54 
2.95  3.00 
3.15  3.10 

4.2S|4.20 

359  3-64 


150 


.06 1  .063 
.85!  1. 10 

1 .20  ,95 
.81   1.07 

7.27  7.01 


.061 

•055 

.86 

1. 19 


•o6i 

•osi 

1.09 

.96 


.82  1.06 


7.26 


7.0: 


5 

6 

7 

4.16 

4.18 

4.201 

4-52 

4.50 

4.48 

1 

2.86 

2.91 

2.96 

3-24 

3-19 

3-U 

4^34 

4.29 

4.24 

3^50 

3^55 

3^60 

•05* 

•OS? 

.o6| 

■o65 

•06J 

.051 

.87 

1.08 

.88 

1. 18 

•97 

1.17 

•S3 

,.05 

.84 

7.25 

7^03 

7.24 

3.01 

309 
4.19 

3^65 

•05  i 

.o6l 


4.24 
4.44 
2.87 
323 
4-33 
3^5 1 
.06J 

•05  i 


1.07    .89 


.98 
1.04 
7.04 


1. 16 

•85 

7.23 


10 

11 

12 

4.26 

4.28 

4^30 

4.42 

4.40 

4^38 

2.92 

2.97 

302 

>i8 

3-'3 

3.08 

4.28 

423 

4.18 

3.56 

3^6. 

3^66 

•055 

■06S 

.06J 

■o6i 

■osJ 

•05»! 

1.06 

■90 

.98! 

•99 

i.iS 

1.07 

1.03 

.86 

1.02 

7-05 

7.22 

7.06 

13 

4^32 
436 
2.88 
3.22 

432 
3.52 
.053 
.061 

.91 
1. 14 

.87 
7.21 


rKKE    LISTS    FOR    MAV    A\l)    JUNK 


10:5 


Price   Lists  fok  May  and  Juxic  (C(intinucd) 

I  14     15 


Japan .     .  . 
Oolnng    . 

Ceylon     .  . 

Y.  Hyson  . 
Enj;.  Breakfast 

Mocha     .  . 

Java    .     .  . 

Maracaibo  . 

Rio      .     .  . 

W.  Pepper  . 

Cinnamon  . 

Cloves     .  . 
Nutmegs 

Ginger     .  . 


The  small  inde; 
25'  equals  25^. 


lbs.  I 
Ilf.  Ch.      60  j 

50 
I  Case  50 

iHf.  Ch.     70 

60 


Bale 

Mat 
Bag 


Box 
Pail 
Bo.\ 
Pail 
Box 
Pail 


Box 
Pail 


150 

75 

1=5 

125 

10 

25 
10 

25 
10 

25 

10 
25 


32 

55 
61 

43 
50 

28= 

'5 
I6-! 

27 
40 

23 
65 
29 


•38 

■49 

•52 

■37 

.56 

.27' 

.28= 

.16 

•14' 

■25 

•38 

■25 

.67 

.38 


16 

40 
52 
47 
35 
53 
30= 
25'' 
■3 
17' 

32 
32 
18 

73 
43 


17 


18 


29 
64 

39 

46 

41 
31 
3'- 
12 


19 


20  I  21 


22 

.28 

•57 
■37 
•47 
.48 

•29- 

.2& 
.14 

.28 

.40 

.65 
•53 


23 

.26 
.69 
•36 
•49 
.36 

•24 

•23 

•19- 

.20 

.29 

•35'^ 
.21 
.69^ 
•54 


24 

•30 
.66 

■42 
■45 
■39 
.28 
.24- 

•I5'- 
.i8- 

•31 

■33 
■>9 

•72 
■48 


25 

■29 

•58 
.46 
.46 

•47 
.26^ 

•29' 

•17 

•13- 

■27 

•34 

■23 

•71 

•44 


X  figures  used  in  the  above  price  li-^ls  iiulicate  "  fourths." 
Price  Lists  for  June  (Continued) 


luals 


25-  equals  25 ^. 


lbs. 


Flour,  Northern  Star Brl. 

'•      Searchlight  Pastry  ....        •• 

Graham Case 

H.  O.  Buckwheat •' 

Oatmeal.  Pawnee Brl. 

Quaker  R.  O Case 


Sugar,  Granulated 

Rice 

Corn 

Tomatoes  .  .  . 
Beans,  Lima  .  . 
Soap.  Ivory      .     . 


Brl. 


Doz. 


Box 


300 
150 


14     15  '  16  I  17 


4^34  4^36 
4^34  4^32 


293 
3^i7 
4.27 

357 
•05 1 
•06J 
1.04 
1. 01 
I  01 
7.07 


2.98 
3^'2 
4.22 
3.62 

•05  i 
.06J 

•92 
'•I3 

.89 
7.19 


4-38 
4^30 
303 
3.07 
4.17 

3^67 
.o6| 
.05} 
1.03 
1.02 

•99 
7.09 


4.40 
4.28 
3.08 
3.02 
4.12 

3-72 
.051 
.06J 

•93 
1. 12 

.90 
7.18 


18 


4.42 
4.26 
2.89 
3.21 
4^3i 
3^53 
.06J 

•05? 
1.02 
•  ■03 
.98 
7.10 


19 


4.44 
4.24 
2.94 
3^i6 
4.26 
3^58 
•osi 
.o6| 

•94 
I. II 

.91 
^17 


20 

21 

4.46 

4.48 

4.22 

4.20 

2.99 

3.04 

3^i' 

3.06 

4.21 

4.16 

3.63  3.68 


.06J 

.055 

1. 01 

1.04 

■97 
7.11 


•051 
.065 

•95 

I 
1. 10 

.92 

7.161 


22 

4.50 
4.18 
2.80 

3^30 
4.40 

344 
•05 1 
.061 
1. 00 
1.05 
.96 
7.12 


23 

4.52 
4.16 
2.84 
3.26 
4^36 
3-48 
•05  s 
.06; 

.96 
1.09 

•93 
7^I5 


24 

4-54 
4.14 
2.82 
3.28 
4^38 
3-46 
.05  i 
.06J 

•99 
1.06 

•95 
7-13 


25 

4.56 
4.12 
2.83 
3^27 
4^37 
3^47 
.061 

•OS* 
•97 


.08 
94 
14 


104  MODKRN    ILl.USrUATIVK   BOOKKEEPING 

QUESTIONS 

I  Explain  the  use  of  the  cash  book. 

2.  Where  should  cash  received  be  entered? 

3.  Where  should  cash  paid  out  be  entered? 

4.  Wliat  should  the  ditTerence  between  the  sides  of  the  cash  book  show? 

5.  Why  should  the  cash  book  be  balanced  frequently? 

6.  When  should  it  be  balanced  daily? 

7.  What  ledger  account  does  the  cash  book  enable  us  to  dispense  with? 

8.  How  sliould  you  show  the  balance  of  cash  in  the  trial  balance? 

9.  Explain  the  use  of  the  sales  book. 

10.  To  what  account  in  the  ledger,  and  to  which  side  of  the  account,  should  the  footing  of  the  sales  book 
be  carried  ? 

11.  What  should  be  the  first  entry  in  tlie  journal-daybook  of  any  business? 

i:.  Why  are  persons  debited  from  the  sales  book  for  merchandise  sold  them  for  cash,  and  then  credited 
from  the  cash  book  for  the  cash  paid  ? 

13.  What  is  meant  by  indorsing  a  note? 

14.  What  is  bank  discount? 

15.  For  what  length  of  time  is  bank  discount  always  calculated? 

16.  How  would  you  proceed  to  find  the  time  of  discount? 

17.  What  entry  should  be  made  on  the  debit  side  of  the  cash  book  when  a  bill  receivable  is  discounted? 

18.  What  entry  should  be  made  on  the  credit  side  of  the  cash  book  in  this  case? 

19.  What  entries  should  be  made  when  a  bill  payable  is  discounted? 

20.  Define  merchandise  discount. 

21.  When  is  merchandise  discount  debited?     When  credited? 

22.  What  is  the  difference  between  discount  and  merchandise  discount? 

23.  To  which  side  of  the  ledger  should  amounts  on  the  left-hand  side  of  the  cash  book  be  carried?     To 
which  side  the  amounts  on  the  right-hand  side? 

24.  How  should  the  cash  book  posting  be  designated  in  the  ledger? 

25.  Why  sliould  the  terms  of  sale  be  shown  in  posting  the  sales  book  items  to  the  ledger? 

26.  What  is  a  bill  of  lading?     What  other  forms  are  made  out  at  the  same  time  with  a  bill  of  lading  ? 

27.  Explain  in  full  the  process  of  making  and  handling  a  set  of  these  forms. 

28.  What  care  should  be  taken  in  writing  a  telegram? 

29.  How  should  figures  be  indicated  in  a  telegram? 

30.  What  is  meant  by  repeating  a  message?     What  is  a  code? 

31.  Describe  the  process  of  shipping  goods  C.  O.  D.  bv  express. 

32.  Describe  the  method  of  entering  C.  O.  D.  sales  in  the  sales  book  and  in  the  ledger. 

33.  How  should  petty  cash  sales  be  entered? 

34.  In  liow  many  scctioiis  is  the  business  statement  closed? 

35.  What  does  the  first  section  of  the  business  statement  show?     The  second  section? 

36.  If  there  are  outside  speculations,  what  further  closing  would  be  necessary? 

37.  What  three  classes  of  resources  are  shown  in  the  financial  statement? 

38.  In  making  a  financial  statement,  where  would  you  find  the  cash  on  hand? 

39.  Where  would  you  find  the  items  comprised  in  "Properties  as  under"  ? 

40.  What  is  comprised  in  "  Sundry  trade  debtors '"  ?     Explain  where  tliese  items  are  found. 

41.  Wh.it  does  "Sundry  trade  creditors"'  include  ?     Where  mav  these  be  found  ? 

42.  How  is  the  proprietor's  net  investment  found  ? 

43.  How  is  the  present  worth  of  the  business  determined  ? 

44.  Why  must  the  present  worth  added  to  the  liabilities  equal  the  resources  ? 

45.  What  entries  in  your  books  should  be  made  in  red  ink? 


SUPPLEMENTARV    KXERCISK  — MAY  105 


SUPPLEMENTARY    EXERCISE  —  No.  3 

BANK    DISCOUNT    AND    INTEREST 

On  a  sheet  of  journal  paper  arrange  a  cash  book  for  the  following  transactions.  You 
will  need  to  rule  one  additional  vertical  line.  Get  a  sheet  of  foolscap,  on  which  to  write 
the  notes. 

For  each  of  the  following  transactions,  write  the  note  and  make  the  proper  cash  hook 
entries.     Reckon  interest  and  discount  at  6%  per  annum  unless  otherwise  stated. 

In  discounting  notes,  always  find  first  the  due  date  of  the  note,  tlien  find  the  actual  nuniljcr  of  davs  from 
the  date  of  discount  to  the  due  date,  and  calculate  the  discount  for  this  time. 

TRANSACTIONS 

May  I,  19 — .  —  You  have  on  hand  D.  H.  Farlev's  note  for  $  1200,  dated  this  day,  at  four 
months.      Have  it  discounted  at  the  City  Bank  at  6  %. 

M.\Y  2.  —  Desiring  to  borrow  money,  you  arranged  with  E.  M.  Parker  to  indorse  a 
note  of  54500  for  you,  pa\able  at  the  City  Bank  in  90  days,  and  the  City  Bank  has  dis- 
counted this  note  and  placed  the  net  proceeds  to  your  credit.     (See  No.  14,  pages  79,  80.) 

May  3.  —  You  have  on  hand  H.  G.  Smith's  note  for  $800,  dated  Jan.  16,  at  four 
months.      Have  this  note  discounted  at  the  City  Bank. 

May  4.  —  You  have  outstanding  a  note  in  favor  of  Reed  &  Barton,  dated  April  25, 
at  three  months,  for  39SO,  and  you  pay  it  to-day  less  the  bank  discount  for  the  ime.xpired 
time.     (Credit  Discoitiit.) 

May  5. — You  have  on  hand  J.  B.  Freeman's  note  for  $728.50,  dated  April  5,  at  four 
months.      He  pays  it  to-day  in  cash,  less  discount  for  the  unexpired  time. 

May  5.  — You  have  on  hand  J.  C.  Schlueter's  note  for  $2400,  dated  April  5,  due  30  days 
from  date,  with  interest ;   he  pays  you  to-day  in  full. 

In  the  above  problem  the  interest  should  be  found  for  the  time  of  the  note  at  6 ';(,.  In  the  cash  book  Cash 
should  be  debited  and  Bills  Receivable  credited  fur  the  face  of  the  note,  with  the  explanation,  /.  C.  Schtiieter  note 
4 1 5.  Cash  should  also  be  debited  and  Interest  credited  for  the  amount  of  interest  on  the  note  ($  12)  with  the 
explanation  on  above  note. 

May  5.  —  Paid  cash  for  my  6-months'  note  due  to-day,  favor  of  Clark  &  Harris,  for 
;Siooo,  with  interest. 

This  problem  is  exactlv  the  reverse  of  the  preceding  one.  Cash  is  credited  and  Bills  Payable  dil)ited.  with 
Clark  &-'  Harris  note  11I3  as  explanation ;  and  Cash  is  credited  and  Interest  debited,  witli  on  above  note  as 
explanation. 

May  7.  —  You  have  on  hand  C.  B.  Fenner's  note  for  $  1 100,  dated  April  25,  at  90 
days.     Have  it  discounted  to-day  at   5  %. 

May  7.  —  You  have  a  note  outstanding  in  favor  of  Charles  Langdon  for  $  1200,  dated 
April  20,  at  four  months.  Langdon  offers  to  allow  you  bank  discount  at  9  %  for  the  un- 
expired time  if  you  will  pay  now,  and  you  accept  the  proposition,  paying  cash. 

May  8.  —  D.  W.    Evans   &   Co.   owe   you   a   note   of    $7000,   dated    Apiil    30,    at    four 


1(1(3  MODERN   ILLUSTRATIVE  BOOKKEEPING 

months.     Needing  the  money,  you  offer  them  bank  discount  at  8  %  if  they  will  pay  the 
note  to-day,  which  they  do. 

M.w  9. — You  have  on  hand  Sam.  F.  Curtis's  note  for  S  I2CX3,  dated  April  20,  at  60 
days,  with  interest  at  6%.     Have  it  discounted  at  the  City  Bank  to-day. 

In  discountinsj  an  interest-bearins;  note,  the  bank  will  first  find  the  amount  due  at  maturity.  S.  F.  Curtis's 
note  of  .April  20,  at  60  days,  will  be  due  June  19.  and  the  interest  on  $  1200  from  April  20  to  June  19.  60 
davs,  equals  S12,  which,  added  to  $1200,  makes  $1212,  the  amount  due  June  19.  This  amount  should  be 
written  on  tlie  face  of  the  note,  in  red  ink,  by  the  bank  teller.  V'ou  have  the  note  discounted  May  9.  The 
bank  teller  will  find  the  time  from  May  9,  the  date  of  discount,  to  June  19.  the  date  of  maturity  (41  davsV 
and  will  compute  the  discount  on  ?  1212.  the  amount  due  at  maturity,  and  deduct  this  discount  from  $  121 2. 
leaving  S  1203.72,  the  net  proceeds  of  the  interest-bearing  note. 

In  this  transaction,  you  have  received  $1200  for  the  face  of  the  note.  In  the  cash 
book  debit  Casli  and  credit  Bills  Receivable  for  $  1200,  with  the  explanation  i".  /•"■.  Curtis 
note  4/20.  The  bank  allowed  you  S12  interest.  Debit  Cash  and  credit /«/rrrj/ for  this 
amount,  with  the  explanation  on  above  note.  The  bank  charged  you  discount,  S8.28. 
Credit  Cash  and  debit  Discount  for  this  amount,  with  the  explanation  5.  F.  Curtis  note  4/20. 

May  10.  —  You  have  outstanding  a  note  for  $  1500  in  favor  of  Barnes  Bros.,  dated  April 
17,  at  90  days,  with  interest  at  Y/t  ■  Barnes  Bros,  need  the  money,  and  agree  to  allow 
you  bank  discount  at  6%  if  you  will  pay  the  note  to-day,  which  you  do.  (Credit  Casli  for 
interest;  debit  Cash  for  discount.) 

In  this  problem  calculate  tlie  interest  at  5  %  and  the  discount  at  67o- 

May  12.  —  You  have  on  hand  the  noteof  The  Allen  Chemical  Company  for  $2650,  dated 
April  12,  at  four  months,  with  interest  at  6%-  Have  it  discounted  to-day  at  the  City 
Bank  at  5%. 

May  12.  —  O.  M.  Curtis  gave  you  a  note  March  13,  at  60  days,  for  $890.75,  with  in- 
terest.    The  note  is  due  to-day,  and  Curtis  has  paid  you  the  amount  due  to  redeem  his  note. 

May  14. — Your  note  for  $746,  in  favor  of  G.  W.  Longlcy,  dated  Feb.  14,  at  three 
months,  with  interest,  is  due  this  day,  and  you  pay  the  note  and  interest. 

May  14.  —  A.  S.  Hewitt's  note  of  March  14,  at  two  months,  for  S  722.87,  with  interest, 
is  due  to-day,  and  he  has  given  you  a  check  for  the  note  and  interest. 

May  15. — Your  note  for  $  1262.25,  in  favor  of  L.  E.  Pearson  &  Co.,  dated  March  31, 
at  45  days,  with  interest  at  5%,  is  due  to-day,  and  you  pay  the  note  and  interest. 

May  15.  —  You  have  your  note  for  S825,  favor  E.  C.  Aver,  and  indorsed  by  him,  dated 
this  day,  at  three  months,  discounted  at  the  Commercial  Bank  at  6^,  and  receive  cash  for 
the  net  proceeds. 

May  16.  —  Bank  messenger  returns  to  you  the  check  of  A.  S.  Hewitt,  received  by  you  and 
deposited  May  14,  marked  "  No  Funds,"  with  a  request  for  your  check  to  cover  same, 
which  you  give.     (Debit  A.  S.  Hewitt.^ 

May  17.  —  The  note  of  H.  G.  Smith,  which  you  discounted  at  bank  May  3,  has  been 
protested  for  non-payment,  and  you  have  been  obliged  to  "give  your  check  for  the  face  of 
the  note  plus  protest  fees,  §2.50.  (Debit  Protested  Paper  for  the  total  amount,  which  you 
wUl  endeavor  to  recover  from  Smith.) 


DRAFTS  — JUNE 

The  business  practice  for  the  month  of  June,  beginning  on  page  1 15,  is  a  continuation  of 
that  for  the  month  of  iVIay,  with  several  additions,  including  drafts.  As  the  subject  of 
drafts  sometimes  gives  trouble,  the  student  should  study  it  now  until  it  is  clear  to  him,  before 
being  called  upon  to  handle  that  form  of  commercial  paper  in  his  vouchers. 

A  Draft  is  an  order  from  one  person,  firm,  or  company  on  another  to  pay  a  certain  sum 
of  money,  unconditionally,  to  the  order  of  some  person,  firm,  or  company  named  in  the  body 
of  the  draft. 

Form  of  Sioht  Draft,  Three  PARxrES 


'■''"->**^~t^-i^~^^^-t^4+M^HiP 


^E£| 


^g^-gst^^-:?-?  jx^^ 


^^^(^^^ 


^y^//i/AJ 


^^.    C^M/^.^^ry/fA?r/';y7//7^/^rA</,f^a/;^^4^^^ 


?0^?gV^C<>^^^:'-?^^ 


t4a<tW:w<Wt*>H4W-H'H444tWiliWM'n»ffi 


In  the  above  draft  Chas.  Rand  orders  \Vm.  French  to  pay  to  the  order  of  Adams  & 
Raker  ^300.  It  is  presumed  that  Wm.  French  owes  Chas.  Rand  this  amount,  and  that 
Chas.  Rand  is  indebted  to  Adams  &  Baker,  and  gives  them  this  order  on  Wm.  French  in 
payment  of  his  indebtedness. 

Parties  to  a  Draft.  — The  "drawer"  is  the  person,  firm,  or  company  that  writes  or  draws 
the  draft.     In  the  form  of  draft  given  above  the  drawer  is  Chas.  Rand. 

The  "payee"  is  the  one  to  whom  the  draft  is  made  payable.  In  the  form  of  draft 
given  the  payee  is  the  firm  Adams  &  Baker. 

The  "drawee"  is  the  one  on  whom  the  draft  is  drawn.  In  the  preceding  form  W'm. 
French  is  the  drawee. 

General  Rule  for  •ToiiriKtlizhiij  Draffs 

Tlic  draiucr  akvavs  credits  the  drazucc,  and  the  drawee  always  debits  the  drawer. 


COURSE  OF  PROCEDURE  WHEN  A  DRAFT  IS  DRAWN 

Chas.   Rand  owes  Adams  &  Baker  and  wishes  to  pay  them   S  300  on  account.     Wm. 
French  owes  Chas.  Rand  and  is  willing  to  pay  to  him,  or  to  his  order,  §300.     Therefore  the 

107 


108 


MODERN   ILLUSTRATIVE  BOOKKEEPING 


following  transaction  is  carried  out:    Chas.  Rand  writes  an  order,  or  draws  a  draft,  June  i, 
on  Wni.  French,  requesting  him  to  pay  to  the  order  of  Adams  &  Baker  S300. 

The  drawer  should,  in  every  case,  notify  the  drawee  that  he  has  drawn  on  him ;  or.  better  still,  notifv  him  in 
advance  that  he  will  draw  on  him  at  a  certain  date,  for  no  one  is  obliged  to  accept  or  pay  a  draft  drawn  on  him 
by  a  creditor. 

Drawer's  Entry.  —  Having  drawn  the  draft,  Rand  gives  it  to  Adams  &  Baker  and  makes 
his  journal  entry,  since  the  transaction  is  completed  so  far  as  he  is  concerned.  Rand  has 
given  Adams  &  Baker  the  order,  which  will  be  worth  S300  to  them  when  presented  to  Wm. 
French  for  payment;  therefore,  Adams  &■  Bahrr  should  be  debited  $300,  the  amount  they 
will  be  paid.  This  amount,  $300,  will  be  paid  by  Wm.  French,  therefore  Wm.  Frcucli 
should  be  credited  the  same  as  if  he  had  paid  the  amount  to  Rand  instead  of  to  the  person 
Rand  designated  in  the  draft. 

The  following  is  the  journal  entry  required  in  the  drawer's  books  for  the  above  draft. 


J  <^  c 


^  e>  <? 


Utile  A. —  The  drawers  entry  'when  a  draft  with  three  parties  is  drawn,  whether  it  be  a 
sight  or  a  time  draft,  is  Payee,  Dr.  and  Dran'ce,  Cr. 

Payee's  Entry.  —  The  payees,  Adams  &  Baker,  receive  the  draft  from  Chas.  Rand,  and 
they  at  once  take  it  to  Wm.  French,  or  deposit  it  in  their  bank  for  collection,  in  which  case 
the  bank  will  take  it  to  French,  who  pays  the  S  300.  In  either  case  Adams  &  Baker  receive 
cash,  S300,  and  should  debit  Cash.  The  draft  which  produces  them  the  S300  was  received 
from  Chas.  Rand,  therefore  Chas.  Rand  should  be  credited  the  same  as  if  he  had  given  them 
the  S300. 

The  following  should  be  the  payee's  entry  on  the  debit  side  of  the  cash  book. 


jZi^>9i^f 


tf-rty^ 


-<s,^ik.<5-»-?-e::-<^  J  a  . 


I   r 


Rule  B.  —  The  payee' s  entry  for  a  sight  draft  received  and  paid  is  Cash,  Dr.  and  Drazcer,  Cr. 

Drawee's  Entry. — When  the  draft  is  presented  to  Wm.  French  he  examines  it  and 
notes  that  Chas.  Rand  has  requested  him  to  pay  $300  to  the  order  of  Adams  &  Baker,  and 
if  he  honors  the  draft,  he  pays  the  amount,  S300,  for  it ;  and  since  he  pays  this  amount  on 
Chas.  Rand's  order,  he  debits  Chas.  Rand  the  same  as  if  the  cash  were  paid  direct  to  him  ; 
and  he  credits  Cash  for  the  amount  paid  out. 

The  following  is  the  drawee's  entry  for  the  above  draft  on  the  credit  side  of  his  cash 
book  (assuming  that  he  pays  it  on  June  2,  to  the  bank  in  which  Adams  &  Baker  deposited  it). 


J/<^^>^,^^2 


L^*a*yU^  .a.^-«^*^^»^  ^^^'^ 


J  a  o 


DRAFTS  — JINE 


109 


Rule  C  — Drazvcc  s  entry  for  a  sight  draft  paid  is  Drazver,  Dr.  and  Cash,  Cr. 

When  a  draft  is  paid,  it  is  kcjit  by  the  drawee,  as  evidence  of  the  payment. 

Ex.  I.  —  Edward  Martin  draws  a  sight  draft  on  B.  W.  Hammond,  June  i,  requesting 
him  to  pay  to  the  order  of  Chas.  Carter  $400,  which  he  does  the  same  day.  Write  the  draft 
and  make  the  entry  of  each  party  to  the  transaction.  For  this  and  the  following  e.\amples, 
page  1 10,  use  foolscap  paper,  or  foolscap  and  joiu-nal  paper. 

Form  of  Time  Draft,  Thrke  P.\rties 


$  f/9tP.- 


Bocbrstrr,  fi.  ^.. 


/.^  ^^  Z      10 


^y^^^J^y  .^^^^l^^.^-z^fUy^^.^.-^'f'^f^^^ 


tbf  ortcr 


^ap  to 


^^,^>7  ^^--^^^^^^ 


BoIIars 


JPalut  receitorb  anD  cljargr  tbr  oaim  to  account  of 


Co 


r^^-A-fT-Z-T^y, 


ftti.^A^  ^^y-^-^T^^y^^^^A,-' 


'^^^.^^^y. 


Time  Drafts. — The  above  draft,  instead  of  being  payable  at  sight,  is  not  payable  until 
30  days  after  its  date,  or  July  2,  and  is  called  a  time  draft.  This  draft,  as  soon  as  received 
by  the  payee,  Edward  Curtis,  should  be  taken  to  the  drawee,  D.  H.  Parsons,  who,  if  he 
decides  to  pay  it,  will  write  Aeeepted  across  the  face,  and  sign  his  name,  as  shown  above. 
This  is  generally  done  in  red  ink,  though  the  color  of  the  ink  is  unimportant. 

For  this  draft,  the  drawer's  entry  will  be  the  same  as  in  the  case  of  the  sight  draft,  for 
the  payee  has  received  value,  and  should  therefore  be  debited,  while  the  drawee  is  to  pay 
the  draft  when  it  falls  due,  and  should  therefore  be  credited. 

The  payee,  however,  instead  of  receiving  cash  from  the  drawee,  Parsons,  has  received  a 
promise  to  pay  in  30  days  ;  for  writing  the  word  "  Accepted,"  and  signing  the  name  across 
the  face  of  a  draft,  constitutes  at  law  a  promise  to  pay.  This  promise  to  pay  is  a  bill  re- 
ceivable to  the  holder,  therefore  the  payee's  entry  should  be  as  follows. 


^017 


t^i'd' 


Sule  D.  —  The  payee's  entry  for  a  time  draft  accepted  is  Pills  Receivable,  Dr.  and 
Drawer,   Cr. 

When  this  draft  is  presented  to  D.  H.  Parsons,  and  he  writes  Accepted,  D.  If.  J\irsotis 
across  its  face,  he  agrees  to  pay  it  in  30  days  after  June  2,  anil  the  draft  at  once  becomes 


110 


MODERN   ILLUSTRATIVE   BOOKKEEPLVG 


to  him  a  bill  payable.  He  should  debit  the  drawer,  ^^.  F.  Archer,  since  it  is  for  him  that  he 
has  assumed  this  obligation,  and  should  credit  Bills  Payable,  since  he  has  issued  his  written 
promise  to  pay  S900  in  30  days  after  June  2,  or  on  July  2.  The  following  should  be  Par- 
sons's  entry  when  he  accepts  the  draft. 


^e>ff 


t^iffi 


HxUe  E. —  T/ic  draivcc's  entry  for  a  time  draft  is  Drawer,  Dr.  and  Bills  Payable,  Cr. 

Ex.  2.  —  Geo.  W.  Allen  draws  a  draft  on  Chas.  W.  Clinton  for  $500,  June  2,  at  45  days 
from  date,  in  favor  of  P.  Y.  Black.  Write  the  draft  as  accepted  by  Chas.  W.  Clinton,  and 
make  the  journal  entry  of  each  party  to  the  transaction. 

Two-party  Drafts.  —  The  draft  is  used  extensively  in  business  for  the  purpose  of  collect- 
ing accounts  that  are  past  due,  and  instead  of  the  promissory  note  in  ordinary  sales  of 
merchandise.  In  these  cases,  the  draft  is  made  payable  to  the  order  of  the  drawer,  and  is 
generally  collected  through  his  bank. 

Form  of  Snarr  Dk.\ft,  Two  Parties 


.  .f^// 


^.■■.  a 


linU-  /•'.  —  When  the  drazcer  is  also  the  payee,  he  credits  the  drai>.<ee  as  visual  and  debits 
Cash  if  the  draft  is  at  sight,  or  Bills  Receivable  if  the  draft  is  a  time  draft. 

Ex.  3.  —J.  B.  Flint,  of  Rochester,  N.Y.,  draws  a  draft  at  sight,  June  3,  in  favor  of  him- 
self, on  A.  H.  Hines,  of  Portland,  Me.,  for  $250,  and  deposits  it  in. his  bank.  Write  the 
draft  and  make  the  entries  of  J.  B.  Flint  and  A.  H.  Hines. 

Ex.  4. —J.  B.  Flint,  of  Rochester,  N.Y.,  draws  a  draft  for  $300,  at  30  days'  sight,  in 
favor  of  himself,  on  J.  L.  O.sborn,  of  Manchester,  N.H.,  who  accepts  it  June  4.  Write  the 
draft  and  the  acceptance,  and  make  the  journal  entries  of  J.  B.  Flint  and  J.  L.  Osborn. 
(For  form,  see  ne.xt  page.) 


DRAITS  — JUNE 
FoKM  OF  Time   Dkaft,  Two   Parties 


m 


$  T-ys-T:^ 


^AjTtdlA 


^^  >  ::i 


^rook.l>^,  N.Y.,. 


7. 


the  order  of 

1  yC/^.^17-1-^^^-. 


a 


C>f^^. 


<^^7^  ^y'/, 19. 


/) 


Pay  to 


-N 


^.^^vk — 


'^-^^^^^.^f^^. 


\ 


■^^^-^  y  ^TTT^ 


Dollars 


Value  received  and  charge  ^te  same  t<^  ace6lint  of 
To_ 

No 


BANK   DRAFTS 

In  business  a  large  proportion  of  remittances  are  made  by  means  of  bank  drafts,  which 
are  accepted  as  cash. 

Form  of  Bank.  Draft 


A  bank  draft,  it  will  be  seen,  is  an  order  from  one  bank  on  another,  requesting  the  pay- 
ment of  a  sum  of  money,  unconditionally,  to  some  person,  firm,  or  company  named  in  the 
body  of  the  draft.  Such  drafts  can  be  purchased  at  any  bank  for  a  small  sum  in  excess  of 
the  amount  for  which  they  are  written.  It  is  the  custom  of  every  bank  to  keep  on  deposit  a 
certain  amount  at  some  bank  in  the  commercial  center  nearest  to  its  place  of  business.  For 
instance,  each  bank  in  the  northeastern  states  will  have  a  deposit  with  some  bank  in  Boston  ; 
each  bank  in  the  middle  west  with  some  bank  in  Chicago;  each  bank  in  the  southwest,  with 
some  bank  in  St.  Louis ;  each  bank  on  the  Pacific  coast,  with  some  bank  in  San  Francisco ; 
and  every  leading  bank  in  the  United  States  will  have  a  deposit  with  some  bank  in  New  York, 
since  New  York  is  the  Commercial  center  of  the  United  States. 

In  the  case  of  the  draft  shown  in  the  illustration,  let  us  suppose  that  Emerson  Bros,  of 
St.  Louis,  Mo.,  wish  to  send  the  Eastman  Kodak  Co.  of  Rochester,  N.Y.,  $590.50,  to  pay 


11: 


MOUERN   ILLUSTRATIVE   BOOKKEEPING 


for  an  order  of  goods  to  be  shipped  at  once.  If  the  Eastman  Kodak  Co.  are  not  acquainted 
with  F.merson  Bros.,  they  would  probably  hesitate  to  accept  their  personal  check  for  so  large 
an  amount  as  S  590. 50,  and  would  delay  shipment  of  the  goods  until  they  found  out  whether 
or  not  the  check  was  good;  therefore,  Emerson  Bros,  make  out  a  check  like  the  following. 


5^^.£^.:  ^ 


KTrfK! 


n 


■^-<»7-^-^-4  //J^ . 


^f^>^. 


'/ 


Emerson  Bros,  take  the  above  check  to  the  Traders  National  Bank  of  St.  Louis.  The 
bank  will  charge  a  small  fee  for  exchange  (in  this  case  50^),  which  is  included  in  Emer- 
son Bros.'  check,  and  will  make  out  a  draft  similar  to  the  form  on  page  in.  Some 
business  hou.ses  have  these  remittance  drafts  made  payable  to  the  order  of  the  person  to 
whom  they  arc  to  be  sent,  but  the  better  way  is  to  have  the  draft  made  payable  to  the  order 
of  the  sender,  who  will  indorse  it  over  to  the  order  of  the  person  to  whom  it  is  sent.  When 
this  is  done,  the  draft  itself,  after  it  has  been  presented  and  paid,  becomes  a  receipt  for 
the  amount  named  in  its  face.  In  this  case,  the  draft  would  be  indorsed  as  shown  below. 
It  would  be  accepted  as  cash  by  the  Eastman  Kodak  Co.,  and  they  would  place  it  as  a  deposit 


■rh:::^^^^^^^^ 


DRAfTS  — JUNE  113 

ill  their  bank  in  Rochester.  Tliis  bank  woiikl  forwartl  the  draft  to  the  bank  with  which  it 
does  business  in  New  York,  and  the  draft  woukl  be  presented  to  the  Seaboard  National 
Bank  of  that  city,  and  that  bank  would  pay  it  and  charge  the  amount  to  the  Traders  Bank  of 
St.  Louis.  The  draft  would  be  returned  to  the  Traders  Bank  as  a  voucher  and  would  be 
kept  by  that  bank. 

EXERCISES    IN   JOURNALIZING   DRAFTS 

In  the  following  exercises  it  is  required  that  the  student  write  each  draft,  with  such 
indorsement  or  acceptance  as  it  should  bear,  and  make  his  journal  and  cash  book  entries  on 
foolscap  or  journal  paper. 

If  the  te.icher  dt-t-ms  it  advisable,  lie  may  require  the  student  to  make  the  journal  and  cash  book  entries  of  all 
parties  to  these  drafts. 

JuxE  I,  19 — .  —  Emmons,  Hvde  &  Co.,  of  Chicago,  III,  have  agreed  to  honor  your  draft 
at  sight  for  $600,  favor  of  K.  L.  Martifi,  and  you  draw  on  them  accordingly.  (See  rule  A, 
page  108.) 

June  2.  —  Draw  on  Geo.  C.  Chase,  Manchester,  N.  H.,  for  $275  at  10  days'  sight,  in 
favor  of  Wm.  Darling  &  Co.     (See  rule  A,  page  108.) 

June  3.  —  S.  A.  Dodge  &  Co.,  Millbury,  Mass.,  have  accepted  your  draft,  dated  June  2, 
for  $  800  at  60  days  after  date,  in  favor  of  yourself.     (See  rule  F,  page  1 10.) 

JuxE  4.  —  Draw  on  John  Reynolds  &  Co.,  St.  Louis,  Mo.,  for  $250  at  sight,  in  favor  of 
yourself.  Deposit  the  draft  in  your  bank  (College  Bank;  indorse  correct!}'),  and  receive 
credit  for  its  face.     (For  proper  cash  book  entry,  see  rule  F,  page  iio.) 

June  5.  —  O.  H.  Waters,  Boston,  Mass.,  has  accepted  your  draft,  dated  June  5,  for 
$  1200  at  four  months  after  date,  favor  of  yourself.  Have  it  discounted  at  the  College  Bank 
and  the  net  proceeds  placed  to  your  credit. 

Prepare  a  discount  slip,  treating  the  draft  exactly  as  you  would  a  four  months'  note  of  a 
similar  amount  and  date. 

For  the  above  transaction,  some  bookkeepers  would  make  a  journal  entry,  debiting  Bi7/s 
Receivable  (see  rule  F,  page  no)  and  crediting  O.  H.  Waters,  after  which  they  would  make 
a  cash  book  entry,  debiting  Casli  and  crediting  Bills  Receivable ;  also  crediting  Casli  and 
debiting  Discount  for  the  discount.  But  the  journal  entry  is  unnecessary,  since  the  bill 
receivable  does  not  remain  in  your  possession.  The  better  method  would  be  to  debit  Cash 
for  the  amount  of  the  draft  and  credit  O.  H.  Waters  in  the  cash  book,  writing  draft  at  4  ntos. 
in  the  second  wide  column  of  the  cash  book;  then  credit  Cash  and  debit  Discount,  writing 
O.  H.   Waters  dft.,  122  das.  in  the  second  wide  column  on  the  credit  side  of  the  cash  book. 

June  6.  —  Wm.  Parsons  &  Co.,  Worcester,  Mass.,  have  drawn  on  you  at  sight  through 
the  College  Bank,  for  $650.  You  pay  it  by  check  on  the  College  Bank,  where  you  have  a 
deposit.     (See  rule  C,  page  109.) 

June  8. — You  receive  from  T.  W.  Preston,  Toledo,  Ohio,  a  draft  dated  June  5,  drawn 
on  you  at  30  days  after  sight,  favor  of  himself,  for  $200.  Accept  the  draft,  payable  at  your 
office.     (See  rule  E,  page  no.) 

June  8.  —  Ward  Bros.,  El  Paso,  Texas,  who  owe  you  on  account,  send  you  a  sight  draft 
on  Thomas  Traynor  &  Co.,  Buffalo,  N.Y.,  in  your  favor,  for  $  300,  and  you  place  the  draft 
in  the  College  Bank  with  your  daily  deposit,  receiving  credit  for  its  face.  (See  rule  B, 
page  108.) 

June  9.  —  Fred  Kemble  &  Co.,  Concord,  N.H.,  owe  you  on  account,  and  they  send  you 


114  MODERN   ILLUSTRATIVE  BOOKKEEPING 

a  draft  at  ten  days  from  date,  for  S4000,  on  A.  B.  Collins,  Pittsburg,  Pa.,  to  apply  on 
account.  Receive  it  at  its  face  value,  and  give  it  to  the  College  Bank  for  collection.  Do 
not  forget  to  indorse  properly.     (See  rule  D,  page  109.) 

June  10.  —  You  owe  Chas.  Farnham  &  Co.  S510  on  account,  and  you  give  them  a  sight 
draft  on  H.  A.  Bowen,  Portsmouth,  N.H.,  for  the  amount. 

Ju.\E  II.  —  You  owe  O.  D.  Byron  S240  on  account,  and  in  payment  you  give  him  a 
draft  on  C.  P.  Larcuni,  Syracuse,  N.Y.,  at  10  days  after  date  for  this  amount. 

Ju.NE  12.  —  Geo.  P'arrish  &  Co.,  who  are  indebted  to  you,  indorse  over  to  you  a  draft 
drawn  by  them,  in  their  favor,  on  Amos  Martin,  Philadelphia,  Pa.,  for  S4S5,  dated  June  i, 
at  four  months  from  date,  and  accepted  by  Martin.  You  receive  the  draft  and  give  Farrish 
&  Co.  credit  for  its  face,  less  bank  discount  at  6%  for  the  unexpired  time.  (Find  the  due 
date  of  the  draft,  and  discount  it  for  the  time  between  June  12  and  the  due  date.) 

June  13.  —  You  have  in  your  possession  a  draft  drawn  by  yourself,  June  4,  on  J.  C. 
Dennis  &  Co.,  Brooklyn,  for  1S915,  at  90  days  from  date,  and  accepted  by  J.  C.  Dennis  & 
Co.  You  give  this  acceptance  to  J.  L.  Osborn  &  Co.  on  account,  indorsing  it  properly,  and 
they  allow  you  its  face,  less  bank  discount  at  6%  for  the  unexpired  time.  (Find  due  date 
and  discount  for  unexpired  time.) 

June  13. — You  have  the  acceptance  of  S.  A.  Dodge  &  Co.,  dated  June  2,  discounted  at 
the  College  Bank,  and  the  net  proceeds  placed  to  your  credit. 

1  land  the  journal  sheet  containing  the  journal  and  cash  book  entries  for  the  above  trans- 
actions, and  the  drafts  which  you  have  written,  to  your  teacher  for  examination.  Be  sure 
you  understand  each  transaction  before  proceeding. 


WHOLESALE    GROCERY    BUSINESS  — JUNE 

H.  F.  Adams  is  desirous  of  adding  a  line  of  standard  groceries  to  his  tea,  coffee,  and 
spice  business,  and  has  admitted  you  as  an  equal  partner.  Mr.  Adams  is  to  do  all  the  buy- 
ing for  the  new  firm  and  also  to  spend  a  part  of  his  time  as  traveling,  or  outside,  salesman, 
while  you  are  to  take  full  charge  of  the  books  and  attend  to  the  payment  of  bills,  write  all 
notes,  checks,  drafts,  and  other  negotiable  paper  of  the  firm,  and  attend  to  the  management 
of  the  store. 

Books  Kept.  —  In  this  month's  work  you  will  use,  in  addition  to  the  books  already  in  use, 
the  invoice  book  and  bill  book. 

The  Bill  Book  contains  a  list  and  a  brief  description  of  all  notes  which  come  into  the 
business  or  which  are  given  by  the  business.  When  notes  are  received  or  given,  the  infor- 
mation called  for  should  be  written  under  the  proper  headings,  as  shown  in  the  bill  book 
(see  model,  page  Ii6).  This  model  contains  the  proper  entries  for  all  notes  received  and 
given  during  the  month  of  May. 

N.B. — You  may  copy  the  entries  found  in  the  model  bill  book  into  your  bill  book 
e.xactly  as  they  appear  in  the  model.  Your  bill  book  will  then  show  all  notes  on  hand  and 
outstanding  at  the  beginning  of  the  month  of  June. 

The  Invoice  Book  is  generally  made  up  of  the  original  invoices,  which  are  pasted  in  the 
book  as  shown  in  the  model  on  page  1 17,  the  amount  of  each  invoice  being  carried  into  the 
money  column  of  the  invoice  book,  as  shown  in  the  model.  When  bills  are  received,  after 
they  have  been  O.  K.'d,  paste  them  in  your  invoice  book,  taking  care  that  the  right-hand 
edges  of  the  bills  do  not  extend  into  the  money  column  of  the  invoice  book. 

A  good  plan  to  pursue  in  tliis  work  is  to  lay  the  invoices  in  the  invoice  book  as  you  receive  tliem,  until 
you  have  accumulated  from  four  to  six  bills.  Then  ask  your  teacher  to  show  you  how  to  paste  them  in  the 
book.     In  actual  business,  the  bills  are  usually  pasted  in  the  invoice  book  at  the  end  of  each  day. 

It  will  be  seen  that  the  money  ciiliuTin  of  the  invoice  book  should  contain  the  amoimt 
of  all  merchandise  bought  by  the  business,  and  therefore  the  footing  of  this  money  column 
should  be  the  debit  of  the  Merchandise  account.  It  will  no  longer  be  necessary  to  enter 
merchandise  purchases  in  the  journal,  but  at  the  end  of  the  month,  or  at  such  periods  as 
may  be  desired,  the  total  footing  of  the  money  column  of  the  invoice  book  should  be  carried 
to  the. debit  side  of  the  Merchandise  account;  postmark  by  writing  the  page  number  of  the 
invoice  book  in  the  folio  column  of  the  ledger,  and  the  ledger  page  of  the  Merchandise  ac- 
count in  the  folio  column  opposite  the  footing  in  the  invoice  book.  The  amoiuit  of  each  bill 
should  be  posted  directly  from  the  invoice  book  to  the  credit  of  each  person  or  firm  from 
whom  the  merchandise  is  purchased,  and  the  page  of  the  account  in  the  ledger  should  be 
written  on  the  invoice  itself,  as  shown  in  the  model  on  page  1 17. 

Grouping  Invoices  in  the  Invoice  Book.  —  It  is  customary  in  some  houses  to  file  the  invoices  until  the  end 
of  the  month.  Then  they  are  pasted  in  the  invoice  book,  but  all  invoices  of  any  one  firm  are  placed  togetlier 
and  only  the  total  amount  posted  to  the  firm's  account  in  the  ledger.  Where  this  plan  is  practicable,  consider- 
able labor  is  saved  in  posting,  and  the  accounts  in  the  ledger  are  considerably  condensed. 

115 


110 


MODERN'   ILLLSTKATlVIi   UOOKKELPING 


-J 

oa 
< 
> 

E 
U 

UJ 


'  >h— 


.1: 


*  > 

i 

w 

J 

S 

J 

cy 

,      \ 

-Y 

5       i 

>- 

< 

£  f 

k     » 

) 

< 

i 

11  4^ 

-J 


'^ 


•»' 


C/) 

-J 
-J 


?     ^ 


1'.  « 


MODEL    INVOICE    liOOK 


117 


118  modern  illustii-vtlvk  u(jokk.eeping 

Form  of  Articlks  of  Copartnership 

Articles  of  Copartneksiiip,  made  the  fust  day  of  June,  one  thousand  nine  hundred 
and  .  .  .  ,  beliceen  f.  B.  Lauison,  of  Manchester,  X.H.,  of  the  first  part,  and  Frank  W. 
Garland,  of  Boston,  Mass.,  of  the  second  part,  zvitnesseth  as  follows  : 

The  parlies  hereunto,  Iiaving  mutual  confidence  in  each  other,  do  this  day  form  with  each 
other  a  copartnership  under  the  firm  name  of  J.  B.  Lamson  &  Co.,  for  the  purpose  of  couduct- 
iug  a  wholesale  business  in  tea,  coffee,  spices,  and  general  groceries,  at  241  Chestnut  St.,  Man- 
chester, N.H.,  under  the  following  terms  and  conditions,  to  wit: 

First.  That  the  said  f.  B.  Lamson  of  the  first  part  shall  contribute  the  entire  resources 
of  his  late  business  located  at  241  Chestnut  St.,  Manchester,  N.H.,  as  shozvn  by  his  financial 
statement  prepared  May  ji,  jgoo,  less  the  liabilities,  as  shozvn  by  that  statement,  which 
liabilities  are  to  be  paid  by  the  firm  off.  B.  Lamson  &  Co.  The  total  net  investment  off.  B. 
Lamson,  as  shown  by  these  statements,  is  $  724J. 

Second.  The  said  Frank  IV.  Garland  of  the  second  part  shall  contribute  cash  to  the 
amount  of  $  724^. 

Third.  The  capital  so  formed  is  to  be  used  and  enjoyed  in  common  bctzveen  them  for  the 
prosecution  and  management  of  said  business,  to  their  mutual  benefit  and  advantage. 

Fourth.  Both  parties  shall  devote  their  entire  time  to  the  business,  and  shall  share  gains 
and  assets  equally,  and  bear  losses  equally,  f.  B.  Lamson  is  entitled  to  drazv  a  salary  of  $  J2j 
per  month,  and  Frank  IV.  Garland  is  entitled  to  drazo  a  salary  of  $100  per  month  from  the 
funds  of  the  business. 

Fifth.  The  said  f.  B.  Lamson  hereby  guarantees  that  all  notes  and  personal  accounts  due 
J.  B.  Lamson,  and  invested  by  him  in  the  firm  of  f.  B.  Lamson  &  Co.,  shall  be  zvorth  their 
face  value,  less  any  regular  trade  discounts  to  which  they  may  be  entitled. 

In  Witness  Whereof,  the  parties  hereto  have  hereunto  set  their  hands  and  seals,  in  dupli- 
cate, the  day  and  year  first  above  written. 

J.  R.  Lamson.  [l.  s.] 

Signed,  sealed,  and  delivered)  Frank.  W.  Garland,      [l.  s.] 

in  the  presence  of  \ 

F.  W.  Earl. 

TRANSACTIONS 

No.  67.  — June  i,  19 — .  H.  F.  Adams  and  you  have  agreed  to  form  a  partnership,  to 
carry  on  a  wholesale  grocery  business  as  a  continuation  of  Mr.  Adams's  tea,  coffee,  and 
spice  business.  You  are  to  invest  a  cash  sum  equal  to  the  present  worth  of  Mr.  Adams  at 
the  close  of  May.  The  gains  and  losses  of  the  business  are  to  be  shared  equally.  Each 
partner  is  to  give  his  full  time  to  the  business,  and  H.  F.  Adams  is  to  draw  a  salary  of  $125 
per  month  and  you  a  salary  of  $  100  per  month.     The  firm  name  is  to  be  H.  F".  Adams  &  Co. 

Prepare  articles  of  copartnership  between  the  two  partners,  yourself  and  H.  F.  Adams 
(see  model  above).  For  amount  of  each  one's  investment,  sec  H.  F".  Adams's  present  worth, 
financial  statement  May  31.  Present  this  co]:)y  to  your  teacher  for  approval,  and  make  such 
changes  as  he  may  suggest.  Copy  carefully,  in  ink,  on  legal  cap,  the  corrected  articles  of 
copartnership  and  present  to  your  teacher,  who  will  sign  for  H.  F.  Adams.  Sign  your 
own  name  below  that  of  H.  F.  Adams,  and  affix  seals.  Ask  some  one  to  sign  as  witness  in 
the  left-hand  corner  opposite  the  names  of  yourself  and  H.  F.  Adams. 

In  busine.ss  a  lawyer  experienced  in  partnership  affairs  should  prepare  these  articles  of  copartnership.  Two 
copies  should  be  made,  one  for  each  partner. 


BUSINESS   PRACTICE  — JUNE 


11<) 


Fold  the  articles  of  copartnership  twice  from  bottom  to  top,  and  brief  them  by  writinj^  on 
the  back,  of  the  left-hand  end,  at  the  top,  the  following :  Artichs  of  Copartnership  between 
H.  F.  Adams  rt«(/ (Student's  namQ),  June  i,  ig —  (current  year). 

Fill  the  blanks  in  the  bill  of  sale  (No.  67),  attach  a  copy  of  the  May  financial  statement, 
and  put  it  in  your  Voucher  File.  In  your  Cash  Drawer  is  A.  W.  McKey's  note.  Indorse 
it  Pay  to  the  order  of  H.  F.  Adams  &•  Co.,  and  sign  the  name  H.  J''.  Adams.  Write  a  check 
in  favor  of  H.  F.  Adams  &  Co.  for  the  amount  of  II.  F.  Adams's  balance  in  Commercial 
Bank,  as  shown  by  the  stub  of  your  check  book  ;  sign  it  as  yiiu  signed  checks  in  May. 
The  transactions  described  in  this  paragraph  are  necessary  to  transfer  the  property  of  the 
business  of  H.  F.  Adams  to  the  new  firm  H.  F.  Adams  &  Co.  Make  no  book  entry  for 
them,  because  you  are  going  to  treat  the  June  business  as  a  continuation  of  the  May  busi- 
ness, instead  of  opening  a  new  set  of  books. 

Make  your  investment  in  the  business  by  check  No.  67  on  your  own  private  account  in 
the  Bank  of  Monroe.  Detach  the  check  from  the  voucher  pad  and  fill  it  out  for  the  proper 
amount.  Sign  your  own  name  to  it.  Enter  the  amount  in  the  cash  book  on  the  first  line 
below  the  balance  for  June  i,  crediting  yourself  for  investment. 

Deposit  Adams's  check  and  your  own  check.  Be  sure  to  enter  this  deposit  on  your 
check  book  stub  so  that  your  check  book  will  show  the  correct  balance  in  bank.  How 
will  you  indorse  these  checks  .' 

N.  B.  Ytiu  should  no  longer  sign  or  indorse  checks  and  other  papers  with  your  name  as  attorney,  for  you 
are  now  a  member  of  the  firm  of  H.  F.  Adams  &  Co.,  and  have  the  same  right  to  sign  checks  and  other  papers 
that  Mr.  Adams  has;  but,  in  order  that  your  teacher  may  be  able  to  identify  your  work  re.adily,  write  By  and 
your  own  name  under  that  of  H.  F.  .-^dams  &  Co.  on  all  paper  you  may  have  occasion  to  indorse  or  sign. 

No.  68. — JuxE  I.  Write  a  cash  check  on  the  Commercial  Bank  (see  form  below)  for 
$200,  get  the  cash  for  it,  and  put  the  money  in  your  Cash  Drawer.  Such  a  check 
requires  no  indorsement. 


^^.t^fi^,  viffe^r. 


// 


///_ 


,  fo  ^^  e 


f^^  '"order  of  -1^..^.^y 


^     f/'^ 


^^y- 


No.  69.  — June  i.     Pay  this  bill  for  stationery. 

Write  a  check  for  the  amount  and  place  the  receipted  bill  in  your  Voucher  File.     Place 
the  check  in  Cash  Paid  Out.     Make  the  proper  entry  in  your  cash  book. 

No.  70.  — June  3.     Bought  merchandise  of  the  City  Mills  Company. 
E.xamine  the  invoice  and  see  that  the  multiplications  and   addition   are  correct.     Mr. 
Adams's  "  O.K."  appHes  only  to  the  terms,  quantity  of  goods,  and  prices.      If  you  find  any 


120  Mor)i:RX  illustrative  bookkkepixg 

error,  ask  your  teacher  (representing  City  Mills  Company)  what  to  do.  If  you  find  the 
invoice  correct,  O.K.  it,  paste  the  invoice  in  your  invoice  book,  and  write  the  amount  of 
the  invoice  in  the  money  column  of  the  invoice  book  (see  model,  p.  117).  No  journal  entry 
is  required  for  this  transaction,  for,  as  e.xplained  on  p.  115,  postings  are  made  directly  from 
the  invoice  book. 

No.  71. — June  3.  Bought  merchandise  of  Reynolds,  Davis  &  Co.  This  transaction 
should  be  treated  in  the  same  manner  as  No.  70. 

No.  72.  -June  4.  You  now  take  out  a  policy  of  insurance  on  your  stock  of  merchan- 
dise for  S  3000  at  I  %  premium. 

Write  a  check  for  the  amount  of  the  premium.  Place  it  in  your  Cash  Paid  Out  envelope. 
Place  the  policy  in  your  Voucher  File,  and  make  the  proper  cash  book  entry  (see  transaction 
No.  30,  page  86). 

No.  73.  — June  4.  You  have  outstanding  a  note  in  favor  of  L.  Hennes  &  Co.,  for  S  1505, 
which  is  due  60  days  after  date.  May  2.  This  note  will  not  fall  due  until  July  i,  but  as  you 
have  money  in  the  bank  which  you  do  not  need  to  use  in  your  business  at  present,  you  may 
pay  it  now.  It  is  the  custom  in  business  to  allow  discount  for  the  unexpired  time  on  all  notes 
paid  before  due,  and  L.  Hennes  &  Co.  have  agreed  to  allow  bank  discount  at  the  rate  of  6% 
per  annum. 

Calculate  the  discount  on  the  amount  of  this  note  for  the  time  which  it  still  has  to  run 
(from  June  4  to  July  1  =  27  days).  Subtract  the  discount,  S.x..\x,  from  the  amount  of 
the  note,  and  write  a  check  for  the  balance.  Place  the  check  in  Cash  Paid  Out.  Receive 
the  note  from  L.  Hennes  &  Co.  by  taking  it  from  your  Bills  Payable  File  ;  write  Paid,  June 
4,  ig — ,  across  its  face,  and  ask  the  teacher  to  sign  the  name  L.  Homes  &■  Co.;  and  place 
the  note  in  your  Voucher  File. 

This  transaction  calls  for  two  cash  book  entries.  Credit  Cash  for  the  full  amount  of  the 
note,  and  debit  Cash  for  the  amount  of  the  discount.  In  your  bill  book  under  "When  and 
how  disjjosed  of"  write  ijoj  in  the  amount  column,  J/itie  4  in  the  date  column,  and  Dis. 
and  the  amount  of  the  discount  in  the  explanation  column. 

Rule  23.  —  Discount  is  credited  zuhen  discount  is  a/loived  to  the  business  on  a  note  or 
draft ;  for  then  it  saves  or  produces  value  for  the  I'usiness. 

Form  of  Notification  of  Dr.\ft 

Rome,  N.  Y.,  June  1,  19 — . 
Messrs.  White,  Smith  &  Perry, 
262  Brown  St. , 
j  Providence,  R.  I. 

Gentlemen, — 

We  have  this  day  drawn  upon  you  at  sight,  in  favor  of  A. 
V.  Jackson  &  Co.,  for  $225.  Please  honor  the  draft. 

Yours  truly, 
'       ■  Williams  &  Raymond. 


^ 


BUSINESS   PRACTICE  — JUXE  121 

No.  74.  —  June  5.  Draw  at  siyht  011  Rice  &  Poml,  of  Georj^etown,  for  $265,  in  favor  of 
E.  Westen  Tea  &  Spice  Co.,  and  .send  the  draft  to  balance  your  account  with  the  latter  firm. 

Write  the  draft,  following  the  model  on  page  107.  Inclose  it  with  a  letter  properly  ad- 
dressed to  E.  Westen  Tea  &  Spice  Co.,  advising  them  of  the  remittance.  Write  a  letter  to 
Rice  &  Pond,  notifying  them  that  you  have  drawn  on  them  at  sight  for  $265,  and  request 
them  to  honor  the  draft  (see  model,  page  120).  Referring  to  Rule  A,  page  loS,  make  your 
journal  entry.     Place  both  letters  in  Vouchers  for  Others. 

No.  75.  —  June  5.  F.  C.  Tenncy  has  agreed  to  honor  your  draft  at  sight  for  $90. 
Draw  on  him  in  favor  of  C.  K.  Fo.x. 

This  transaction  is  similar  to  No.  74.  Proceed  in  the  same  way.  Why  do  you  debit 
C.  K.  Fox?     Why  do  you  credit  F.  C.  Tenncy? 

No.  76. — June  5.  On  A.  W.  McKey's  order  of  goods  you  will  allow  1%  discount  in 
consideration  of  McKey's  accepting  a  draft  at  30  days  from  the  date  of  the  sale. 

Make  a  bill,  checking  off  each  item  on  the  salesman's  order.  Enter  the  sale  in  your 
sales  book  for  the  full  amount  and  place  the  bill  in  your  Vouchers  for  Others. 

Using  the  forms  on  pages  109,  11 1,  as  models,  draw  a  draft  at  30  days  for  the  amount  of 
the  bill,  less  l  %.  Do  not  write  Accepted  ?lcxos>s  the  face,  but  take  the  draft  to  your  teacher, 
who  will  accept  it  for  Mr.  McKey  by  writing  Accepted,  with  the  name  A.  IV.  Jl/cA'cr,  across 
the  face  of  the  draft.  When  he  has  done  so,  enter  the  accepted  draft  in  your  bill  book,  after 
which  place  it  in  your  Cash  Drawer. 

This  transaction  requires  a  journal  entry  of  two  debits  and  one  credit.  (.See  rule  F,  page 
1 10,  and  rule  20,  page  79.)     Submit  entry  to  teacher  before  placing  it  in  your  journal. 

No.  77. —  June  6.  Mr.  Adams  sends  in  this  order  from  F.  C.  Tenncy.  This  transaction 
is  like  No.  ^6,  except  that  you  allow  a  discount  of  3  '/c  for  payment  by  a  ten-day  acceptance. 

Make  out  a  bill  and  verify  your  calculations.  Draw  a  ten-day  draft  on  F.  C.  Tenney  for 
the  amount  of  the  bill,  less  3  %,  get  it  accepted,  and  make  proper  entries. 

No.  78. — June  6.  Bought  merchandise  of  West,  Stone  &  Co.  Mr.  Adams  has  agreed 
to  accept  a  draft  at  10  days,  and  the  draft  ready  for  acceptance  accompanies  the  invoice. 

See  that  the  invoice  is  correctly  made,  and  if  the  amount  is  correct,  write  across  the  face 
of  the  draft,  in  red  ink.  Accepted,  payable  at  Commercial.  Bank,  H.  F.  Adams  &  Co.  by,  and 
your  own  name.  Return  the  draft  thus  accepted  to  West,  Stone  &  Co.  (by  placing  it  in  your 
Bills  Payable  File),  after  you  have  entered  it  in  your  bill  book. 

Paste  the  invoice  in  your  invoice  book,  and  enter  the  full  amount  in  the  money  column 
(at  the  proper  time  you  will  post  it  from  this  book  to  the  credit  of  West,  Stone  &  Co.,  and 
will  include  it  in  the  amount  posted  to  the  debit  of  Alercliandise'). 

Make  a  journal  entry  for  the  draft  and  the  3  %  discount  allowed.  (See  rule  16,  page  29, 
and  rule  19,  page  "]?>.) 

No.  79.  —  June  7.  This  order  from  A.  A.  Knowles  &  Co.  comes  in  with  a  check  for  $600 
to  apply  on  account. 

Make  bill,  verify  your  calculations,  and  enter  in  the  sales  book.  Place  the  check  in  your 
cash  drawer  and  make  the  proper  entry  in  your  cash  book. 

No.  80.  — June  7.  Deposit  in  your  bank  the  check  received  from  A.  A.  Knowles  &  Co., 
and  have  the  two  acceptances  received  June  5  and  6  discounted  and  the  net  proceeds  placed 
to  your  credit.     Also  leave  for  collection  the  note  of  A.  W.  McKey,  which  is  due  June  10. 

See  that  your  note  and  acceptances,  as  well  as  the  check,  are  properly  indorsed. 


]±2  MODERN  ILLUSTRATIVE  BOOKKEEPING 

Make  out  a  separate  discount  slip  for  each  of  the  acceptances.  Make  cash  book  entries 
and  enter  the  acceptances  in  the  bill  book  under  "  When  and  how  disposed  of,"  on  the  same 
line  with  the  original  entries,  writing  the  face  of  each  in  the  amount  column,  and  Dis.  and 
the  amount  of  the  discount  in  the  space  for  "  Remarks."  Your  bank  pass  book  should  show 
a  separate  entry  for  each  acceptance.  Do  not  forget  to  enter  the  net  proceeds  of  the  two 
acceptances  and  the  deposit  separately  on  the  stub  of  your  check  book. 

Make  no  entry  in  your  journal  or  cash  book  for  the  note  left  for  collection,  but  in  the 
"  Remarks"  column  of  the  bill  book,  write  For  coll.  Coml.  Bank,  June  7,  ig — .  This  note 
should  be  entered  on  the  last  page  of  your  bank  pass  book  under  the  heading  Collections. 
(If  you  have  no  bank,  write  the  heading  Collections  at  the  top  of  the  last  page,  and  below  it, 
in  proper  columns,  ig — ,  June  7,  A'ote  A.  IV.  McKcy,  joo.)  You  will  be  notified  when  the 
note  is  paid,  and  the  amount  will  then  be  placed  to  your  credit  in  the  pass  book  the  same  as 
a  deposit. 

Some  banks  give  a  receipt  for  notes  and  other  paper  left  for  collection,  instead  of  entering  them  in  the  back 
part  of  the  pass  book.  Others  enter  all  sucli  paper  in  the  regular  place  in  the  pass  book,  short  extending  the 
amount  (th.it  is,  writing  the  amount  in  the  explanation  column  and  not  in  the  money  column).  Then  after  the 
collection  has  been  made,  the  amount  is  entered  in  the  regular  money  column  by  the  bank  bookkeeper. 

No.  81.— JuxE  7.  EIGHTH  Rl-:PORT.  Make  out  your  report  and  hand  it,  with 
Vouchers  for  Others  and  Cash  Paid  Out,  to  your  teacher.  Do  not  balance  the  cash  book  at 
this  point,  but  if  your  cash  book  pages  are  nearly  filled,  rule  and  foot  them  in  red,  writing 
the  word  Ford,  on  the  line  with  the  footings  on  both  pages ;  and  transfer  the  footings  to  the 
following  pages,  in  black  ink,  with  the  explanation  Brot.  Ford.     See  page  83  for  these  forms. 

No.  82. — June  8.     Pay  City  Mills  Co.  for  bill  of  June  i,  deducting  a  discount  of  3%. 

Calculate  the  discount  and  make  out  a  check  for  the  balance.  Write  a  letter  to  go 
with  the  check,  inclose  them  in  an  envelope  properly  addressed,  and  place  in  Vouchers  for 
Others.     Be  sure  to  make  proper  entries  in  the  cash  book  and  on  the  check  stub. 

No.  83. — June  8.     Purchased  merchandise  of  City  Mills  Co. 

Verify  the  invoice  and  paste  it  in  your  invoice  book.  What  should  you  do  if  you  find 
an  error  in  it .'' 

No.  84.  — June  10.     Pay  invoice  of  Reynolds,  Davis  &  Co.  by  check,  less  discount. 

No.  85.  —  June  10.  Fill  E.  Mason  &  Co.'s  order,  making  an  invoice  and  bill  of  lading 
as  usual ;  draw  a  draft  as  requested;  enter  the  draft  in  your  bill  book;  and  leave  the  draft 
at  your  bank  for  collection,  having  it  recorded  under  Collections  in  your  bank  pass  book. 

This  draft,  when  accepted,  will  become  a  bill  receivable.  If  you  should  send  the  draft 
to  Mason  &  Co.  for  acceptance,  you  would  make  no  entry  at  the  time,  in  either  bill  book  or 
journal,  but  would  await  its  return  from  them.  Instead  of  doing  this  you  have  placed  the 
draft  in  the  bank  for  collection,  which  is  the  ordinary  method  of  handling  such  paper.  As 
Mason  &  Co.  have  agreed  to  accept  it,  you  may  debit  Bills  Receivable  and  credit  them. 

No.  86.  — June  1 1.     This  order  for  Fletcher  Bros,  has  been  handed  in  by  Mr.  Adams. 
Make  a  bill,  and  do  not  forget  to  check  off  the  items.     Be  sure  your  calculations  are 
right.     Charge  Fletcher  Bros,  in  the  sales  book  with  the  full  amount  of  the  bill. 

No.  87.  — June  12.  This  check  has  been  received  in  payment  of  merchandise  delivered 
yesterday  to  Fletcher  Bros.,  less  3  %  cash  discount.  Credit  them  on  the  debit  side  of 
cash  book  for  the  full  amount  of  the  bill,  as  shown  in  your  sales  book.  Debit  Merchandise 
Discount  on  credit  side  of  cash  book  for  the  amount  of  the  discount. 


BUSINESS   rRACIICE  — JUNE  123 

No.  88. — June  12.  This  hill  is  for  freight  and  drayage  on  all  goods  received  up  to 
date.     Pay  it  in  cash. 

Place  the  proper  amount  of  cash  in  your  Cash  Paid  Out  envelope,  and  place  the 
receipted  bill  in  your  Voucher  file. 

No.  89.  — June  12.  On  May  5th  H.  V.  Adams  borrowed  from  the  bank  $  5000,  to  pay 
for  the  building  and  lot,  No.  246  Main  St.,  giving  a  four  months'  note  for  the  amount.  As 
you  now  have  several  thousand  dollars  in  the  bank,  for  which  there  is  no  immediate  use, 
you  have  decided  to  pay  this  note,  as  discount  will  be  allowed  for  the  unexpired  time.  The 
note  has  85  days  to  run,  and  the  discount  on  $  5000  for  85  days  is  $7x.x^. 

Make  a  check  for  $4gxx.xy,  take  it  to  the  bank  teller,  and  receive  the  canceled  note. 

If  no  bank  is  used  in  connection  with  these  transactions,  the  note  will  be  found  in  Bills  Payable  File.  Take 
it  from  the  tile,  write  PtuW,  June  12,  ig—,  across  the  face  of  tlie  note  and  ask  the  teacher  to  sign  for  the  bank. 
Place  the  check  in  Cash  Paid  Out,  instead  of  giving  it  to  the  bank  teller,  and  place  the  note  in  your  Voucher 
File. 

Make  proper  entries  in  your  cash  book  and  bill  book.  In  the  bill  book,  under  "When 
and  how  disposed  of,"  on  the  same  line  with  the  original  entry  of  the  note,  enter  the  face 
of  the  note  in  the  amount  column,  and  write  Z^w.  and  the  amount  of  the  discount  under 
"  Remarks." 

No.  90. — June  12.  This  order  from  F.  H.  Randall  &  Co.  comes  in  with  a  check  for 
$500  to  apply  on  account.  Make  the  bill  and  enter  in  the  sales  book.  Credit  F.  H.  Ran- 
dall &•  Co.  in  the  cash  book  for  the  amount  of  the  check. 

No.  91. — June  13.  This  invoice  has  been  purchased  from  Reynolds,  Davis  &  Co. 
Verify  the  calculations  and  paste  the  invoice  in  the  invoice  book. 

No.  92. — June  13.  Take  from  your  Cash  Drawer  ^100  in  currency,  and  also  the 
checks  of  Fletcher  Bros,  and  F.  H.  Randall  &  Co.  Deposit  these  in  the  bank,  and  ask  the 
teller  if  the  interest-bearing  note  of  A.  W.  McKey,  dated  May  31,  and  left  by  you  for  collec- 
tion, has  been  paid.  It  has  been  paid.  Therefore,  ask  him  for  the  proper  credit  in  the 
bank  pass  book. 

On  a  slip  of  paper  calculate  the  interest  on  this  note  for  10  days,  and  add  the  amount  of 
the  interest  to  the  face  of  the  note.  This  is  the  amount  which  should  be  placed  to  your 
credit  in  the  bank  pass  book.  If  your  interest  calculation  is  correct,  the  bank  clerk  will 
give  you  credit  for  the  amount  of  the  note,  which  is  its  face  plus  the  interest.  ( If  no  bank 
is  used,  enter  the  ainount  yourself.)  Add  this  amount  to  your  bank  balance  on  the  stub  of 
your  check  book,  and  also  add  the  amount  of  the  deposit  slip. 

You  have  received  $701.17  in  cash.  Of  this  amount  $700  is  for  bills  receivable,  the 
amount  of  A._W.  McKey's  note  ;  therefore.  Bills  Receivable  should  be  credited  for  $  700  in 
the  cash  book,  with  the  explanation,  A.  W.  McKc/sjiote  j/ji.  The  remaining  $1.17  has 
been  received  for  interest,  and  therefore  Interest  should  be  credited  in  the  cash  book  for  that 
amount,  with  the  explanation,  on  above  note.     Make  proper  entry  in  the  bill  book. 

liule  24. — -Interest  is  credited  zvkcn  interest  is  allowed  to  the  business  by  others ;  for 
then  it  produces  value  for  the  business. 

No.  93.  —  June  13.  Your  acceptance  of  June  3  is  due  to-day,  and  as  it  was  made  pay- 
able at  the  bank,  it  should  be  charged  to  your  account. 

Take  this  acceptance  from  the  Bills  Payable  File,  and  present  it  to  the  bank  teller, 
requesting  him  to  charge  it  to  your  account.  (In  business  the  draft  would  be  presented  by 
West,  Stone  &  Co.'s  bank.)     He  will  keep  the  draft  and  return  it  to  you  canceled,  together 


V2i  MODERN   ILLUSTRATIVE  BOOKKEEPLN'G 

with  the  paid  checks,  when  your  bank  book  is  written  up.  If  you  have  no  bank,  write 
Paid,  June  13,  ig — ,  across  the  face  of  the  draft,  and  enter  it  on  the  credit  side  of  your  bank 
pass  book,  pkicing  the  canceled  draft  in  your  Voucher  File. 

Make  an  entry  in  your  cash  book,  to  show  that  the  acceptance  has  been  paid.  What 
account  should  be  debited .'  Why .''  In  your  check  book  on  the  stub  deduct  this  amount, 
Shi  1.62,  from  the  amount  on  deposit,  as  shown  by  the  balance  of  the  stub.  Why  should 
this  be  done.' 

Some  banks  would  require  a  check  in  favor  of  the  bank  for  the  amount  of  the  acceptance  and  would  deliver 
the  paper  at  once. 

No.  94. — June  14.  This  order  for  Rice  &  Pond  has  been  sent  in  by  Mr.  Adams,  who 
is  on  an  out-of-town  trip.  Desiring  to  take  advantage  of  the  discount,  Rice  &  Pond  have 
given  him  their  note  at  four  months,  with  interest,  for  S  1000,  to  pay  the  balance  of  their  old 
account  and  to  apply  on  this  order.  They  agree  to  accept  a  sight  draft  for  the  balance  of 
the  order,  whatever  it  may  be,  or  will  send  check  on  receipt  of  bill. 

Deduct  3%  on  the  face  of  the  invoice,  but  enter  the  full  amount  in  the  sales  book. 
Make  proper  entry  for  the  discount  and  note  in  the  journal.  Also  enter  the  note  in  the  bill 
book.  Do  not  draw  at  sight  for  the  balance,  as  the  amount  is  small,  but  allow  it  to  remain 
on  account. 

No.  95. — June  14.  This  order  from  Thos.  Varick  &  Co.  is  sent  in  by  Mr.  Adams,  who 
vouches  for  the  financial  standing  of  the  firm.  They  ask  regular  ten-day  cash  discount, 
and  agree  to  honor  a  sight  draft  in  ten  days. 

Make  out  the  invoice  and  bill  of  lading  as  usual,  and  draw  a  sight  draft  for  the  amount 
of  the  invoice  less  3  %,  dating  it  ten  days  ahead,  or  June  24.  Write  a  letter  to  accompany 
the  bill,  informing  Varick  &  Co.  that  you  will  draw  on  them  in  ten  days  for  the  amount  of 
the  hill  less  3%-  Inclose  invoice,  letter,  and  bill  of  lading  in  an  envelope  properly 
addressed.  Put  the  draft  in  your  Cash  Drawer  after  pinning  to  it  a  memorandum  of  the 
cash  book  entries  to  be  made  when  the  draft  is  disposed  of  —  namely,  Cash  Dr.  and  TIios. 
Varick  Sf  Co.  Cr.  for  the  gross  amount  of  invoice,  and  Casli  Cr.  and  Mdse.  Discount  Dr.  for 
the  discount.  On  June  24,  or  two  or  three  days  before,  you  will  place  the  draft  in  bank  for 
collection,  or  deposit  it.     You  will  be  reminded  when  to  do  this. 

No.  96. — June  14.  Pay  your  invoice  of  June  5,  City  Mills  Co.,  S1266,  less  3%  dis- 
count. Calculate  the  discount,  which  will  be  $3.\.x8.  Write  a  check  for  the  amount  due. 
Inclose  the  check  with  a  letter,  advising  them  of  the  remittance,  in  a  properly  addressed 
envelope,  and  place  in  Vouchers  for  Others.     Make  the  proper  entries  for  the  transaction. 

No.  97.  — June  15.  This  jnirchase  has  been  made  from  Smith,  Perkins  &  Co.,  and  you 
get  3  %  discount  in  consideration  for  giving  an  interest-bearing  note. 

Write  a  note  at  15  days,  with  interest,  for  the  amount  of  the  invoice  less  3%.  Make 
proper  entries.     Place  the  note  in  Bills  Payable  File. 

No.  98. — June  15.  SHIPMENTS.  This  letter  suggests  a  shipment  of  merchandise 
to  another  person,  to  be  sold  on  commission;  such  transactions  are  not  at  all  uncommon  in 
business.  When,  for  any  reason,  goods  are  not  selling  well  in  any  particular  locality,  it  is 
often  good  policy  to  send  them  to  a  commission  merchant  in  some  place  where  there  is 
likely  to  be  a  better  demand  for  them.  The  commission  merchant  sells  the  goods,  and  after 
taking  a  certain  per  cent  for  commission,  and  deducting  other  charges,  sends  the  balance  to 
the  person  who  shipped  the  goods.  A  quantity  of  goods  shipped  to  be  sold  on  commission 
is  designated  as  a  "  shipment."     The  shipment  is  entered  in  the  sales  book  under  the  title 


SHIPMENTS  — JUNE 


125 


"  Shipniciit  to  (the  name  of  tlic  commission  mcrcliaiil)."  The  shipment  is  charged  for  the 
regular  cost  price  of  the  merchandise,  and  if  any  charges  have  been  paid,  the  shipment  is 
also  debited  for  these  in  the  cash  book. 

An  account  is  opened  in  the  ledger  with  each  shipment.  If  two  or  more  shipments  are 
sent  to  the  same  firm,  separate  accounts  are  opened  with  Slupiiuiit  (lirm  name)  No.  i, 
Sliipvicnt  (firm  name)  No.  2,  and  so  on. 

Send  Thos.  W.  Bowen  &  Co.,  Dover,  a  trial  shipment  of  50  barrels  Xorthern  Star  and 
25  barrels  Searchlight.  Fill  out  a  shipment  invoice  found  in  your  business  forms,  figuring 
the  goods  at  the  latest  cost  price  as  shown  in  your  invoice  book.  Also  fill  out  a  bill  of 
lading  and  inclose  both  shipment  invoice  and  original  bill  of  lading  in  an  enveloi)e  addressed 
to  Thos.  W.  Bowen  &  Co.  The  following  form  illustrates  the  proper  method  of  entering  the 
shipment  in  the  sales  book. 


/CO 


c-e.'sz^/oooii'' 


4<  — 
so, 


/  /^o 


Rttle  25 S///PAf£:i\'TS  air  debited  for  the  cost  priee  of  tlic  vicrcliaiidise  sliippcd,  and  for 

all  advance  charges  paid  upon  it. 

No.  99.  — June  15.  Payyour  clerks  as  follows:  R.  E.  Leavitt,  ;^30;  D.  J.  Allard,  ;S20. 
As  you  have  not  enough  money  in  your  Cash  Drawer,  make  out  a  cash  check  for  the 
amount  required,  $50.  (See  transaction  No.  68.)  Get  the  cash  from  the  bank  and  place  it 
in  Cash  Paid  Out.  (If  there  is  no  bank,  present  the  check  to  your  teacher,  who  will  give 
you  the  money.) 

No.  100.  — June  15.  NINTH  REPORT.  Make  out  your  report  and  hand  it,  with 
Vouchers  for  Others  and  Cash  Paid  Out,  to  your  teacher.  Although  on  the  report  it  is 
desired  to  show  only  the  amounts  of  cash  received  and  paid  since  the  last  report,  the  cash 
book  should  be  pencil  footed  so  as  to  show  the  totals  of  cash  received  and  paid  since  the  last 
of  May,  when  the  cash  book  was  last  balanced.  Do  not  rule  the  cash  book  again  until  the 
end  of  June. 

No.  101. — June  17.  Fill  D.  W.  Perry  &  Co.'s  order  for  the  small  lot  of  tea  (  100  lb.), 
and  on  the  bill  deduct  a  discount  of  3  %.  Hold  the  order  for  the  larger  lot  of  goods  until 
you  and  Mr.  Adams  are  satisfied  as  to  the  reliability  of  the  firm. 

Make  out  a  C.  O.  D.  envelope  and  enter  the  sale  in  your  sales  book,  as  in  No.  55,  ]>age 
94.     (The  discount  will  be  entered  through  the  cash  book  when  the  returns  come  in.) 

No.  102. — June  17.  You  have  received  but  few  orders  for  Ceylon  tea  recently,  so  you 
have  decided,  with  Mr.  Adams,  to  make  a  shipment  of  20  cases  of  this  tea,  closing  out  your 
stock.  Send  it,  with  10  mats  Java  coffee,  to  Thos.  W.  Bowen  &  Co.,  of  Dover,  to  be  sold 
on  commission.      Pav  freight  in  advance,  $3.60,  in  currency. 

Enter  the  shipment  in  your  sales  book  {Shipment  Thos.  IV.  Boiven  &■  Co.  No.  2),  and 
make  the  proper  entry  in  your  cash  book  for  the  $3.60  paid  as  freight.  What  account 
should  be  debited  for  this  amount }     Why .''     (See  No.  98.) 


126  MODKKN    ILLUSTRATIVE   BOOKKKEPING 

No.  103. — June  17.  This  purchase  of  merchandise  has  been  made  from  Geo.  C.  Buell 
&  Co.     Paste  the  invoice  in  your  invoice  book  after  verifying  the  calculations. 

No.  104. — June  18.  Write  a  check  for  the  amount  due  Shields  Bros.,  and  send  it  to 
them  with  a  letter.     Make  the  proper  entry. 

No.  105.  —  June  18.  This  draft  has  been  drawn  on  you  by  L.  Hennes  &  Co.,  and  is  the 
amount  due  for  bill  of  May  24.  Accept  the  draft,  and  return  it  to  L.  Hennes  &  Co.  (by 
placing  it  in  your  Bills  Payable  File).  Why  should  you  write  the  date  in  your  acceptance .' 
What  account  should  be  debited.'     Why.'     (See  transaction  No.  jS,  page  121.) 

No.  106. — June  19.  The  references  given  by  D.  W.  Perry  &  Co.  prove  satisfactory; 
fill  the  main  part  of  their  order  of  June  15  (No.  loi);  make  the  terms  4  mos.,  3/10. 

No.  107.  — June  19.  These  two  express  money  orders  are  a  return  of  C.  O.  D.  sent  June 
17.  The  express  company  has  retained  50^  for  return  charges.  Make  the  proper  entries 
in  cash  book  (see  No.  58,  page  94). 

No.  108. — June  19.  Take  from  your  Cash  Drawer  the  note  of  Rice  &  Pond  received 
June  14th,  and  have  it  discounted  and  the  net  proceeds  placed  to  your  credit. 

This  is  a  four  months'  interest-bearing  note ;  therefore,  on  a  discount  memorandum, 
write  the  amount  of  interest  which  will  be  due  Oct.  1 2,  on  which  date  the  note  is  payable, 
and  add  the  interest  to  the  face  of  the  note.  The  interest  on  S  1000  for  four  months  is  S  20. 
From  June  19  to  Oct.  12,  the  due  date  of  the  note,  is  1 15  days.  Calculate  the  discount  on 
$  1020,  the  amount  due  Oct.  12,  for  115  days,  subtract  this  amount  from  $  1020,  and  you  will 
have  the  amount  to  be  placed  to  your  credit  in  your  bank  pass  book  and  on  the  stub  of 
your  check  book. 

In  the  cash  book  debit  Cas/i  for  the  note,  $1000,  and  also  for  the  interest,  S20.  What 
account  should  be  credited  for  the  $1000.'  Why.'  What  account  should  be  credited  for 
the  S20  interest.'     Why  .' 

On  the  credit  side  of  your  cash  book  you  should  enter  the  amount  of  discount  you  have 
allowed  the  bank,  which  is  S  19.55.     Make  proper  entry  on  your  check  book  stub. 

No.  109. — June  19.  F.  H.  Randall  &  Co.  have  ordered  goods  and  sent  you  a  check 
sufficient  to  jiay  the  balance  of  their  bill  of  June  12,  and  part  of  the  merchandise  ordered  in 
their  letter  accompanying  the  check.  Allow  them  3  %  discount  on  as  much  of  the  goods  as 
this  check  will  pay  for. 

At  3  %  discount,  97^  will  pay  for  S  i.OO  worth  of  goods  as  invoiced  at  their  regular  price, 
therefore  it  is  evident  that  S600  will  pay  for  as  many  dollars'  worth  as  97^  is  contained  in 
S600.  S600  -i-  .97  =  $618.56,  and  F.  H.  Randall  &■  Co.  should  be  credited  for  this  amount. 
Enter  $6i8.s6  on  the  debit  side  of  your  cash  book,  and  on  the  credit  side  enter  $iS.j6,  the 
amount  of  merchandise  discount  allowed  F.  H.  Randall  &  Co.  Enter  the  sale  as  usual  in 
the  sales  book. 

No.  110.  — June  20.  This  account  sales  has  been  received  from  Thos.  W.  Bowen  &  Co., 
together  with  a  check  for  the  net  proceeds.  It  is  the  amount  you  have  received  for  the 
shipment  made  June  15,  and  shows  you  how  much  Bowen  &  Co.  received  for  the  goods,  also 
the  amount  they  paid  for  freight  and  their  conmiission.  What  account  should  be  debited .' 
What  has  produced  value  to  the  business  in  this  case .' 

Mule  20.  —  Shipments  are  credited  with  the  net  proceeds  shown  on  the  account  sales  re- 
ceived from  the  person  to  whom  the  shipment  was  sent. 

Place  the  check  in  your  Cash  Drawer,  and  the  account  sales  in  your  Voucher  File. 


BUSINESS   PRACTICE  — JUXE  .  ll^T 

No.  111. — June  20.  Take  from  )'our  Cash  Drawer  and  iudor.se  properly  the  express 
money  orders  received  June  19;  also  the  checks  of  V.  II.  Randall  &  Co.  and  Thos.  W. 
Bowen  &  Co.  Enter  the  amounts  on  a  deposit  ticket,  and  take  it  with  the  checks,  orders, 
and  your  bank  pass  book  to  the  bank.     Make  the  proper  entry  on  your  check  book  stub. 

No.  112. — JuxE  20.     Purchase  of  merchandise  on  account  from  Shields  Bros. 

No.  113.  —  June  20.     Pay  Reynolds,  Davis  &  Co.'s  invoice  of  June  10,  less  2  %,  by  check. 

No.  114.  — June  21.  This  bill  from  City  Carting  Co.  is  for  freight  and  cartage  to  date. 
Write  a  check  for  the  amount,  and  place  it  in  Cash  Paid  Out.  What  do  you  do  with  the 
receipted  bill .''     What  account  should  be  debited  for  this  amount  in  your  cash  book.' 

No.  115.  — June  21.  Mr.  Adams  has  purchased  this  invoice  from  E.  Westen  Tea  &  Spice 
Co.  and  has  agreed  to  accept  a  draft  at  30  days  for  $800,  the  balance  to  be  paid  in  four 
months.  Accept  the  draft  which  accompanies  the  invoice,  and  place  it  in  Bills  Payable  File. 
Why  is  it  unnecessary  to  write  the  date  in  your  acceptance.'     Make  the  proper  entries. 

No.  116. — June  21.     Bought  merchandise  of  West,  Stone  &  Co.     Enter  as  usual. 

No.  117.  —  June  22.  Mr.  West,  of  West,  Stone  &  Co.,  has  called  ujjon  you,  soliciting 
orders,  and  being  short  of  money  has  agreed  to  allow  you  2  %  discount  on  the  invoice  of 
May  20,  which  is  not  due  until  July  19,  if  you  will  accept  a  ten-day  draft.  You  agree 
to  this  proposition,  and  accept  a  draft  for  the  amount,  less  2%.  Submit  your  journal 
entry  to  your  teacher  for  approval  before  writing  it  in  the  journal. 

No.  118.  — June  22.  Smith,  Perkins  &  Co.  have  decided  to  retire  from  business,  and  have 
offered  Mr.  Adams  a  trade  discount  of  12.]%  from  regular  market  quotations  for  such  goods 
as  he  can  use  from  stock.     This  invoice  has  been  selected  on  the  terms  indicated. 

Write  the  check  and  note,  and  make  proper  entries  in  cash  book,  journal,  and  bill  book. 
(If  in  doubt,  show  entries  to  your  teacher  before  writing  them  in  the  books.)  Place  the 
check  in  Cash  Paid  Out  and  the  note  in  Bills  Payable  File. 

A  trade  or  commercial  discount  is  an  allowance  deducted  from  the  catalogue  or  list  price  of  goods  in  order 
to  meet  the  current  market  quotations  or  to  encourage  or  effect  a  sale.  It  is  deducted  on  the  invoice,  to  show  the 
net  price  really  asked  for  the  goods,  and  this  net  price  is  the  one  extended  to  the  money  column  of  the  invoice 
book  or  sales  book,  to  be  carried  to  merchandise  account ;  for  no  Trade  Di.scount  account  is  kept  in  the  books. 

Merchandise  Discount  account  includes  only  such  allowances  as  are  otTered  for  the  purpose  of  securing 
prompt  payment ;  these  allowances  are  commonly  called  cash  discounts.  A  cash  discount  is  always  allowed  oil 
conditioti  of  prompt  payment ;  if  the  purchaser  does  not  pay  within  the  given  time,  he  becomes  liable  for  the 
gross  amount.  But  a  trade  discount  is  allowed  without  conditions ;  the  purchaser  does  not  become  liable  for 
the  gross  amount  in  any  case. 

No.  119. — June  24.  Take  the  sight  draft  on  Thos.  Varick  &  Co.  from  your  Cash 
Drawer,  detach  memorandum,  and  enter  the  draft  on  a  deposit  ticket.  Take  this  ticket 
and  the  draft,  with  your  bank  pass  book,  to  the  bank,  and  ask  the  teller  to  enter  the  draft 
to  your  credit.  You  drew  this  draft  at  the  time  of  sale,  but  made  no  entry.  What  account 
should  be  debited,  now  that  you  have  received  credit  for  the  draft  at  your  bank .' 

It  is  the  custom  of  most  banks  to  place  sight  drafts  to  the  credit  of  responsible  depositors,  when  requested, 
the  same  as  checks.  If  not  paid,  the  depositor  is  notified,  whereupon  he  gives  the  bank  his  check  for  the 
amount,  and  takes  the  draft  back. 

No.  120. —June  24.  TENTH  REPORT.  Make  out  your  report  and  hand  it,  with 
Vouchers  for  Others  and  Cash  Paid  Out,  to  your  teacher.  Do  the  pencil  footings  of  your 
cash  book  show  the  total  cash  received  and  paid  since  the  last  of  May  1 


128  MODERN'  ILLUSTRATIVE  BOOKKEEPING 

No.  121.  — June  24.  This  account  sales  has  been  received  from  Thos.  \V.  Bowen  &  Co., 
who  have  placed  the  net  proceeds  to  your  credit  subject  to  your  sight  draft.  What  account 
should  be  debited  for  this  amount .'  Why .''  What  account  should  be  credited  ?  Why  .' 
Where  should  you  keep  the  account  sales  ? 

No.  122. — June  24.  Fill  this  order  from  Fletcher  Bros,  as  requested.  Allow  a  mer- 
chandise discount  of  3  %  ;  and  draw  a  draft  at  30  days  on  them  for  the  net  amount  of  the 
bill,  with  30  days'  interest  at  6  %  added.  (Addin<j  6  %  interest  to  the  net  amount  of  the 
bill  will  give  you  in  30  days  the  same  amount  as  if  they  had  paid  you  cash  and  you  had 
placed  it  on  interest  for  that  time.) 

Take  the  draft  to  your  teacher,  who  will  accept  it  for  Fletcher  Bros,  if  the  amount  is  cor- 
rect, luiter  the  sale  in  the  sales  book  for  the  full  amount  of  the  invoice;  and  make  journal 
entry  for  draft,  interest,  and  merchandise  discount.     .Submit  to  your  teacher  before  entering. 

No.  123. — Junk  24.  The  draft  on  E.  Mason  &  Co.,  at  10  days,  left  for  collection  June 
lOth,  has  been  paid.  Have  the  bank  teller  enter  the  amount  in  your  bank  pass  book.  (If 
you  have  no  bank,  enter  it  yourself.)  Make  the  proper  entry  in  your  cash  book,  and  do 
not  fail  to  add  the  amount  to  the  balance  shown  on  the  stub  of  your  check  book. 

No.  124.  — June  24.  Draw  a  draft  at  sight  on  Thos.  W.  Bowen  &  Co.  for  the  net  pro- 
ceeds of  shipment  No.  2,  as  shown  by  account  sales  of  June  22.  Enter  the  amount  of  this 
draft  on  a  deposit  slip  and  take  it  to  the  bank  with  your  bank  pass  book.  Have  the  teller 
give  you  credit  for  the  amount  of  the  draft  (see  No.    1 19).     Make  proper  entries. 

No.  125.  — June  24.     Fill  this  order  from  Thos.  Varick  &  Co.      Do  not  forget  bill  of 

lading. 

No.  126. — June  25.  This  order  from  1).  W.  Perry  &  Co.  is  sent  in  by  Mr.  Adams,  with 
a  check  for  $  500  to  apply  on  invoice  of  the  19th.  Allow  3  %  discount  for  such  part  of  tiie 
bill  as  this  check  will  pay  (see  transaction  No.  109,  page  126). 

No.  127.  —  June  25.  This  draft  was  drawn  by  A.  W.  McKey  on  C.  H.  Brooks  &  Co.  on 
June  15,  and  was  accepted  by  C.  H.  Brooks  &  Co.  McKey  hands  the  acceptance  over  to 
you  to  apply  on  account,  less  bank  di.scount  at  6  %. 

The  acceptance  is  not  due  for  50  days,  therefore  it  is  not  worth  its  face,  $  500,  but  the 
discount  on  $  500  for  50  days  should  be  deducted  from  the  face  of  the  paper  in  order  to  find 
out  what  it  is  really  worth  to  you  on  June  25.  The  discount  on  $  5CX5  for  50  days,  this 
being  the  time  from  June  25,  the  date  of  di.scount,  to  August  14,  the  date  of  maturity,  50 
days,  equals  $4.17.  Deducting  $4. 17  from  $  500  leaves  $495.83,  the  cash  value  of  the  draft 
June  25.  Credit  y^.  IF.  J/rAVj' for  this  amount.  What  account  should  be  debited  for  the 
face  of  the  draft  ?     Why  ?    What  account  .should  be  credited  for  $  4. 1 7  .^     Why  .' 

No.  128. — June  25.  .Ship  Thos.  W.  Bowen  &  Co.  ux)  brls.  N.  S.  flour,  100  brls.  Search- 
light, 20  hf.  chests  English  Breakfast,  24  hf.  chests  Oolong,  100  doz.  C.  corn,  100  doz.  C. 
tomatoes,  and  pay  freight  in  advance  by  check,  S  27.      Make  proper  entries. 

No.  129. — June  25.  Draw  at  four  months  from  date,  on  \'arick  &  Co.,  in  favor  of  E. 
Wrstcn  Tea  &  Spice  Co.,  for  the  amount  of  tiie  bill  of  the  24th,  $  510.04.  Send  the  draft 
to  K.  Westen  Tea  &  Spice  Co.,  to  apply  on  account,  less    discount  for  four  months  at  6  %. 

The  draft  is  not  worth  S  510.04  until  it  becomes  due,  four  months  after  date,  or  Oct.  25. 
The  discount  for  four  months  will  be  $  10.20.  The  net  value  of  the  draft  at  this  time,  there- 
fore, is  $499.84.     Place  tlie  draft  in  Vouchers  for  Others. 


BUSINESS   PRACTICE  — JUNE  129 

No.  130. — June  26.  On  the  evening  of  June  25  a  fire  resulted  in  the  partial  destruc- 
tion of  the  building,  No.  246  Main  St.,  and  the  total  loss  of  office  furniture.  The  books  were 
saved;  also  the  cash  and  the  contents  of  the  safe.  Most  of  the  gootls  were  destroyed. 
From  your  books  you  find  that  you  had  on  hand  the  list  of  goods  No.  130.  This  schedule 
of  goods  has  been  carefully  made  up  from  your  sales  book  and  invoice  book,  and  is  believed 
to  be  a  correct  statement  of  merchandise  on  hand  at  the  time  of  the  fire. 

Fill  out  the  amounts.  Sign  your  own  name  after  that  of  Mr.  Adams.  Then  hand 
the  schedule  to  your  teacher,  who  represents  the  insurance  company,  and  tell  him  that  you 
present  this  as  your  claim  for  loss  by  the  fire. 

No.  131. — June  26.  This  offer  from  Fletcher  Bros,  requires  the  consent  of  the  Equita- 
ble Insurance  Company  before  it  can  be  accepted,  as  no  adjustment  of  the  loss  has  been 
made.  Ask  your  teacher,  who  represents  the  insurance  company,  for  permission  to  accept 
this  offer.  He  will  write  Pci-niission  is  Itcrcby  granted  to  accept  this  offer,  across  the  face  of 
the  letter  from  Fletcher  Bros.,  and  you  may  make  out  a  bill  of  sale  for  the  entire  lot  with- 
out itemizing. 

No.  132.  —June  27.  Deposit  all  the  checks  you  have  on  hand.  Pay  invoice  of  Geo.  C. 
Buell  &  Co.,  of  June  14,  less  discount,  by  check. 

No.  133. — June  28.  Your  acceptance  of  June  iS,  favor  of  L.  Hennes  &  Co.,  is  due 
to-day. 

Take  this  acceptance  from  Bills  Payable  File,  and  proceed  exactly  as  in  No.  93. 

No.  134.  —  June  30.  This  draft  is  in  full  payment  of  claims  against  the  Equitable 
Insurance  Company,  which  pays  you  $5000  on  the  building  and  $3000  on  the  stock  of 
merchandise.  What  account  should  be  credited  for  $5000.'  What  account  for  $3000? 
Make  the  proper  entries. 

No.  135.  —  June  30.  Deposit  the  New  York  draft  received  to-day,  and  all  your  cash. 
Pay  your  note  of  June  15  and  interest  by  check.  Face  of  note,  $816.55;  interest,  15 
days,  $2. XX.  The  check  is  for  S8i8.xx.  What  account  is  debited  for  $816.55.''  What 
account  is  debited  for  $2.xx.' 

Mule  '27.  —  I.XTEREST  is  debited  when  interest  is  allozced  bv  the  business  to  other  pet-sons  ; 
for  then  it  costs  t/ic  business  value. 

No.  136.  — June  30.  In  the  journal  credit  yourself  $  100  and  H.  F.  Adams  $  125  for  the 
amount  due  for  salaries  for  the  month  of  June.     What  account  should  be  debited  for  $225 .'' 

No.  137. — June  30.  Draw  a  cash  check  for  $50,  and  pay  H.  F.  Leavitt  $30  and  D.  J. 
Allard  $20,  salaries  due  to  date. 

No.  138. — June  30.  H.  F.  Adams  hands  in  a  bill  of  $87.50  for  traveling  expenses 
incurred  while  on  the  road  during  the  month  of  June,  which  he  has  paid  from  his  own 
funds.     What  account  should  be  debited  for  this  amount .'     What  account  should  be  credited } 

No.  139.  — June  30.     Pay  freight  and  cartage  bill  to  date  by  check. 

No.  140.— June  30.  ELEVENTH  REPORT.  Make  a  report  and  hand  it,  with 
Vouchers  for  Others  and  Cash  Paid  Out,  to  your  teacher. 

If  your  report  is  O.  K.,  balance  and  rule  your  cash  book  as  at  the  end  of  May,  dropping 
the  balance  to  the  debit  side  and  placing  the  amount  in  the  right-hand  money  column. 

Leave  your  pass  book  at  the  bank  to  be  written  up.  As  soon  as  it  is  returned  to  you, 
compare  it  and  the  canceled  checks  with  the  stub  of  your  check  book  in  the  manner  de- 
scribed on  page  66. 


130 


MUDElvN    ILLUiTl'LVnVE   liOURKLLl'I.NG 


>Q>/..    '      .  '.jy-^^-i^a^t^^- 


t/^l^tU^.. 


»  M  //ft 


..^^^2Z-«i^<i-(S^,'^^;i -Z^»-^ 


/ 2  ^t>. 


f  /  a^ 

f  /  a  i> 

i 

POSTING,  ETC. 

Post  your  entries  from  journal,  cash  book,  invoice  book,  and  sales  book.  For  instructions 
in  regard  to  the  posting  of  the  invoice  book,  see  page  1 1 5.  Check  back  your  postings  ac- 
cording to  instructions  on  page  25.  Make  out  your  monthly  statement  to  each  customer 
and  take  a  trial  balance. 

Verify  the  bill  book  by  comparing  it  with  the  Bills  Receivable  and  Bills  Payable  accounts 
in  the  ledger.  The  footing  of  the  left-hand  money  column  of  the  bills  receivable  book 
should  agree  with  the  total  debit  of  Bills  Receivable  account.  The  footing  of  the  right-hand 
money  column  must  equal  the  total  to  the  credit  of  Bills  Receivable  account. 

In  comparing  the  bills  payable  book,  the  left-hand  money  column  must  tally  with  the 
credit  side  of  Bills  Payable  account  in  the  ledger,  and  the  right-hand  money  column  of  the 
bills  payable  record  must  agree  with  the  debit  side  of  the  Bills  Payable  account. 

Consequently  the  difference  between  the  money  columns  of  the  bill  book  must  be  the 
same  as  the  balance  of  these  accounts  in  the  ledger. 

How  to  Make  the  Business  Statement.  —  Using  the  above  form  as  a  model,  prepare  a 
statement  of  the  gains  and  losses  of  the  month  just  closed.  The  names  of  the  accounts 
used  in  the  model  are  those  of  your  June  accounts,  but  the  amounts  are  different,  and  are 
used  only  to  show  you  the  exact  form  of  a  complete  statement. 

The  Mcrcliandisc  on  hand  at  the  beginning  of  June,  and  the  cost  of  Merchandise 
purchased  during  the  month,  will  be  found  on  fhe  debit  side  of  the  Merchandise  accoimt 
in  the  ledger.     The  sales  of  Merchandise  during  the  month  of  June  will  be  found  on  the 


SFATEMENTS  — JUNE 


131 


V 


-G^UC-€-Ji^Mt~?C'-z'2^'-.*^2--'  f^^.^-e^  -^  /  .^'J't.^e^  -^~^^^€>-C-^^^^z^^ 


credit  side  of  the  Merchandise  account  in  the  ledger.  This  amount  inckides  the  amount 
received  for  insurance.  Find  the  loss,  and  close  the  first  section  of  your  business  statement, 
bringing  down  the  loss  in  the  second  section.  Find  the  cost  of  Shipment  to  Thos.  W.  Boivcii 
&■  Co.  No.  2,  from  the  debit  side  of  that  account  in  the  ledger ;  find  the  net  proceeds  from  the 
credit  side.  Find  the  vahie  of  Real  Estate  at  the  end  of  May  from  the  financial  statement  of 
May  31.  The  lot  on  which  your  building  stood  is  estimated  to  be  worth  $6000.  The 
amount  received  for  insurance  is  shown  on  the  credit  side  of  Real  Estate  account  in  your 
ledger.  The  amounts  of  Expense  and  Office  Fixtures  will  be  found  on  the  debit  side  of 
those  accounts  in  the  ledger.  Net  proceeds  of  Shipment  to  Thos.  W.  Boiven  &  Co.  No.  i  will 
be  found  on  the  credit  side  of  that  account  in  the  ledger;  the  cost  on  the  debit  side.  The 
excess  of  Merchandise  Discount  will  be  found  by  taking  the  balance  of  that  account,  as 
shown  in  your  trial  balance,  and  the  same  is  true  of  Interest  and  Discount.  Write  the  net 
loss  in  red  ink,  and  close  the  business  statement. 

How  to  Make  the  Financial  Statement. —  Using  the  form  on  the  following  pages  as 
a  model,  prepare  a  financial  statement  for  the  month  of  June.  The  names  used  in  the 
model  are  those  of  your  accounts  for  the  month  of  June,  but  the  amounts  are  different,  and 
are  used  merely  to  give  you  a  complete  form. 

Cash  in  bank  will  be  the  amount  of  cash  shown  in  your  trial  balance ;  also  on  the  stub 
of  your  check  book.  Real  Estate  will  be  shown  by  your  inventory  at  the  end  of  June,  S  6000. 
The  ledger  valuation  of  Shipment  to  Thos.  IV.  Bo'Men  &  Co'.  No.  3  will  be  shown  by  the  trial 


132 


MODERN   ILLUSTRATIVE   BOOKKEEPING 


y- 


&  a  ^ 


//'J-^/ 


balance.  The  amount  of  Bills  Receivable  will  be  the  balance  of  that  account,  as  shown  in 
your  trial  balance.  Open  book  accounts  considered  good  will  comprise  the  eight  personal  ac- 
counts having  a  debit  balance,  as  shown  in  your  trial  balance.  The  amount  of  Bills  Payable 
will  be  the  balance  of  that  account,  as  siiown  in  your  trial  balance.  Open  book  accounts  will 
comprise  the  balances  due  the  four  firms  which  you  owe  on  account. 

Close  all  accounts  in  your  ledger  showing  losses  or  gains;  also  the  Loss  &  Gain  account, 

and  the  ])artners'  accounts. 

No.  141. — June  30.  It  has  been  decided  to  discontinue  the  business.  You  take  as  a 
part  ot  your  net  worth  the  amount  of  the  shipment  to  T.  W.  Bowen  &  Co.  No.  3,  at  its  ledger 
valuation.  Si 95 5,  and  receive  a  check  for  the  balance.  Make  out  the  check,  and  enter  in 
the  cash  book.  Make  a  journal  entry  to  show  the  transfer  of  the  shipment.  Post  these  two 
entries  and  balance  the  cash  book.  H.  F.  Adams  retains  the  remaining  resources  of  the 
business,  you  agreeing  to  make  up  half  of  any  losses  which  may  occur  from  bad  debts, 
and  he  agreeing  to  pay  all  the  liabilities  of  the  business.  The  real  estate  is  valued  at 
S6000.  Draw  a  check  to  the  order  of  II.  F.  Adams  for  the  balance  of  cash  remaining 
in  hank. 

Prepare  a  memorandum  of  this  agreement,  and  sign  it  and  ask  your  teacher  to  sign  for 
11.  F.  .Adams.     Get  your  check  cashed  and  hand  the  amount  to  your  teacher. 

Prepare  a  notice  of  dissolution  of  partnership  (see  model  on  ne.xt  page),  and  inclose  a 
copy  with  your  monthly  statement  to  each  customer. 


In  business  sucli  a  notice  would  be  sent  to  all  persons  with  whom  this  firm  had  dealings,  and  it  would  als 
be  published  in  the  local  newspapers. 


STATEMENTS  —  JUNE 


133 


/^ 

-2^ 

'.^n^/. y  ■'  7t.z^3^,/f- 

7  Z  <?  C 

^J  Off 

so 

J-<7 

Y^JJ-y' 

1 

Write  a  letter  to  Thos.  W.  Bowen  &  Co.,  Dover,  notifying  them  of  the  dissoUition,  and 
requesting  them  to  send  the  net  proceeds  of  shipment  No.  3  to  you  when  they  render  an 
account  of  sales.     Sign  the  letter,  and  ask  your  teacher  to  sign  for  H.  F.  Adams. 

Form  of  Notice  of  Dissolution  of  Partnership 

You  are  hereby  notified  that  the  copartnership  heretofore  existing  bctivcen  H.  F.  Adams 
and  E.  C.  Mills  under  the  firm  name  of  H.  F.  Adams  &■  Co.,  at  Albany,  N.  V.,  is  this  day 
dissolved.  Accoimts  due  the  firm  are  to  be  paid  to  H.  F.  Adams,  and  all  claims  against  the 
fir7n  should  be  presented  to  him  for  payment  zvhen  due. 

Dated  Albany,  N.  Y.,Junejo,  ig — . 


H.  F.  Adams. 
E.  C.  Mills. 


ACCOUNT   BOOKS 


The  Books  of  Account  which  you  have  used  in  this  course  are  divided  into  two  classes : 
Principal  books  and  Auxiliary,  or  helping,  books. 

Principal  Books.  —  A  principal  book,  you  have  learned,  is  one  from  which  or  to  which 
posting  is  done.  In  this  class  are  the  journal,  cash  book,  sales  book,  invoice  book,  and 
ledger. 

Auxiliary  Books.  —  An  au.xiliary  book,  you  have  learned,  is  one  which  helps  to  complete 
the  record  by  supplying  certain  details,  but  in  which  no  debits  and  credits  are  recorded  and 
from  which,  consequently,  no  posting  can  be  done.  In  this  class  are  the  check  book  and 
bill  book.  Other  examples  are  the  stock  book,  in  which  is  kept  a  detailed  record  of  the  mer- 
chandise on  hand ;  and  the  time  book,  which  records  the  number  of  hours'  labor  done  by 
each  employee. 


i:U 


MODERN   ILLUSTRATIVE   BOOKKEEPING 


Books  of  Original  Entry.  —  A  book  of  original  entry  is  one  in  wliich  the  first,  or  original,  record  of  a  transac- 
tion is  made. 

The  daybook,  when  used  as  a  separate  book,  is  a  book  of  original  entry.  The  modern  method  is  to  combine 
the  daybook  with  the  journal  as  explained  on  page  lo,  which  makes  the  journal-daybook  a  book  of  original 
entry.     The  other  books  mentioned  on  page  1 33,  except  the  ledger,  are  also  books  of  origin.aI  entry. 

The  books  of  original  entry  have  a  value  peculiar  to  themselves,  which  is  not  possessed  by  books  of  subse- 
quent entry.  If  all  hooks  were  destroyed  e.xcept  the  books  of  original  entry,  the  set  could  be  easily  completed, 
since  the  books  of  original  entry  contain  a  record  of  every  transaction  and  all  other  books  are  written  up  from 
these  original  records. 

Furthermore,  books  of  origin.al  entry  are  the  only  books  admitted  as  evidence  in  court.  As  such  their  value 
is  greatly  enhanced  if  they  have  been  w  ritten  up  with  care  and  accuracy.  Any  errors  occurring  in  them  should  be 
corrected  in  such  a  way  as  to  be  self-explanatory  and  without  making  any  er.isures. 

Index  Book.  —  For  convenience  in  referring  to  accounts  in  the  ledger,  it  is  necessary  to 
have  the  names  of  all  accounts  arranged  in  alphabetical  order  in  a  book  especially  arranged 
for  that  jiurpose,  with  the  page  number  of  the  ledger  page  on  which  the  account  appears 
written  immediately  after  the  name  of  the  account.  This  inde.K  book  may  be  bound  in  the 
fore  part  of  the  ledger,  or  it  ma}'  be  a  separate  book.  The  student  should  make  a  careful 
index  of  his  ledger  on  the  pages  left  for  that  purpose  at  the  beginning  of  the  ledger. 

Before  beginning  to  post,  the  bookkeeper  in  actual  business  (or  an  assistant)  will  find  from  the  index  book 
the  ledger  page  number  of  e.ich  account  appearing  in  the  cash  book,  sales  book,  journal,  or  invoice  book,  and 
insert  it  in  the  folio  column  before  the  name  of  the  account.  This  enables  one  in  posting  to  referdireclly  to  tlv 
page  of  the  ledger  on  which  the  account  appears,  without  loss  of  time.  As  each  entry  is  posted,  a  check  mark  is 
placed  hy  the  folio  in  the  book  jjosted  from. 

GENERAL   REVIEW 

Unless  otherwise  directed,  you  may  use  common  foolscap  paper  and  rule  properly  for 
the  journal,  sales  book,  cash  book,  and  ledger,  on  which  to  make  the  records  required  in 
the  following  series  of  transactions,  which  are  designed  to  test  your  understanding  of  the 
princiiiles  taken  up  in  the  past  three  months'  voucher  work. 

The  Stock  Book.  —  The  only  thing  new  in  this  review  exercise  is  the  stock  book.  The 
form  of  stock  book,  or  perpetual  inventory,  illustrated  below  is  designed  to  show  the 
quantity  of  goods  on  hand  from  day  to  day.  As  goods  are  purchased,  the  number  of  yards 
is  entered  in  the  Bot  column  and  added  to  the  number  in  the  On  Himd  column.  The 
number  of  yards  sold  is  entered  in  the  Sold  cfAwmw  and  deducted  from  the  On  Hand  column. 
Thus  the  last  number  in  the  On  Hand  column  will  always  show  the  quantity  of  goods  in 
stock.     The  form  below  shows  part  of  the  stock  book  for  the  following  transactions. 


Form  of  Stock  Book 


AXMINS  :  . 

Body  Brussels 

ISGRAIN 

LlNlNw 

Bot. 

Sold 

On  Hand 

Boi. 

Sold 

On  Hand 

Bot. 

Sold 

On  Hand 

Hot. 

Sold 

On  Hand 

June 

2 
4 
4 
4 
5 
5 
6 

7 
8 

400 

145 

400 
255 

750 
892 

150 

450 
150 

750 
600 

.50 
892 

500 

1200 

200 
400 

1200 
1000 

600 

2500 

2200 
2000 

300 
600 

S50 

1200 

2500 
2200 
1600 

750 

2950 
4950 

3750 

GENERAL   REVIEW  — JUNE  135 

An  inspection  of  the  form  will  show  thnt  each  purchase  or  sale,  whether  composed  of 
one  or  many  items,  occupies  one  line.     The  date  of  the  transaction  is  given  in   each  case. 

A  stock  record  of  this  kind  doi-s  not  obviate  tlie  necessity  of  taking  an  inventory.  An  inventory  of  goods 
on  hand  should  be  taken  periodically  and  the  result  compared  with  the  stock  book. 

Some  bookkeepers  prefer  the  card  index  system  for  keeping  a  record  of  stock  on  hand.  By  this  method  a 
card  is  used  for  each  item  of  merchandise,  the  name  of  the  article  being  written  at  the  top  of  the  card.  Under- 
neath this,  in  special  ruled  columns,  i.s  ke|)t  a  record  of  goods  fit^t.,  sold,  and  on  hand.  There  is  also  a  column 
for  the  date  or  order  number.  The  cards  are  filed  in  a  drawer  in  alpliabetical  order  according  to  the  name  of 
the  article.     When  a  card  is  filled,  the  record  is  continued  on  a  new  card. 

Rule  on  foolscap  paper  a  stock  book  similar  to  the  form  shown.  Use  red  ink,  of  course, 
for  the  rulings.  Enter  in  your  stock  book  the  quantities  bought,  sold,  and  on  hand  from 
day  to  dav.  If  you  do  not  fully  understand  this  book,  ask  your  teacher  to  explain  it. 
The  results  shown  by  the  stock  book  at  the  end  of  the  month  must  agree  with  the 
inventory  on  page   137. 

With  reference  to  the  remainder  of  the  work  in  this  review,  you  are  not  to  secure  any 
information  from  any  source,  but  you  are  expected  to  rely  solely  upon  the  knowledge  of 
the  subject  which  you  have  gained  thus  far. 

Your  teacher  will  assign  you  price  lists  from  the  Cost  and  Selling  Price  Lists,  page  137. 

Use  great  care  in  figuring  your  bills  and  making  your  entries  so  that  no  mistake  will 
appear  in  your  work. 

After  your  journal,  cash  book,  and  sales  book  have  been  written  up,  go  over  the  trans- 
actions carefully  to  see  that  no  mistakes  have  been  made.  Then  post  to  your  ledger  and 
take  a  trial  balance.  Prepare  business  and  financial  statements,  and  close  your  ledger, 
after  which  present  all  your  papers' to  the  teacher. 

TRANSACTIONS 

JuxE  I.  —  Commenced  the  Wholesale  Carpet  business,  at  No.  182  Elm  Street,  invest- 
ing cash,  S5500. 

June  i.  —  Paid  $  250  for  office  furniture. 

June  2.  —  Bought  of  John  H.  Pray  &  Co.,  Boston,  net  30,  2/10,  600  yds.  moquette,  750 
yds.  body  brussels,  1200  yds.  ingrain,  1200  yds.  matting,  2500  yds.  lining. 

June  3.  —  Bought  of  Barton  &  Bros.,  Philadelphia,  on  your  note  at  15  days,  with  in- 
terest, 1220  yds.  linoleum,  1429  yds.  oilcloth. 

June  4.  —  Sold  E.  B.  Ailing  &  Co.,  for  cash,  less  3  %,  125  yds.  moquette,  150  yds.  body 
brussels,  300  yds.  lining. 

June  4.  — Sold  F.  H.  W^alling  &  Co.,  net  30,  2/10,  200  yds.  ingrain,  400  yds.  matting, 
600  vds.  lining. 

June  4.  —  Sold  J.  G.  Carter  &  Co.,  on  their  note  at  4  mos.,  400  yds.  moquette,  450  yds. 
body  brussels,  850  yds.  lining. 

June  5.  — Sold  E.  H.  Smith  &  Co.,  on  their  acceptance  at  30  days,  75  yds.  moquette, 
150  yds.  body  brussels,  600  yds.  linoleum,  429  yds.  oilcloth. 

June  5.  —  Discounted  J.  G.  Carter  &  Co.'s  note  of  the  4th  inst.  at  the  City  Bank. 

June  5.  —  Bought  of  John  H.  Pray  &  Co.,  Boston,  net  30,  2/10,  950  yds.  moquette,  892 
yds.  body  brussels,  2200  yds.  lining. 

June  5.  —  Paid  freight  and  drayage  on  merchandise,  $32.10;  rent  for  month  of  Jime, 
$75  ;  books  and  stationery,  S22.50. 


i:W  MODERN   ILLUSTRATIVE  BOOKKEEPING 

June  5. — ^  Bought  of  James  Smith  &  Co.,  New  York,  subject  to  a  lo-day  draft,  400  yds. 
axminslor,  525  yds.  velvet,  9S4  yds.  tapestry  brussels,  2000  yds.  lining. 

Ju.NE  7.  —  Paid  James  Smith  &  Co.'s  draft  of  June  5,  at  10  days  from  date,  for  S2252.88, 
less  discount  for  the  unexpired  time. 

June  7.  —  Sold  Rccd  &  Savage,  subject  to  sight  draft,  less  3%,  145  yds.  axminster,  220 
yds.  velvet,  484  yds.  tapestry  brussels. 

June  8. —  Drew  a  sight  draft  on  Reed  &  Savage  for  the  amount  of  invoice  sold  them 
7th  inst.,  less  3%,  and  had  the  draft  placed  to  your  credit  in  the  City  Bank. 

June  8.  —  Sold  Knowles  &  Johnson,  on  account,  net  30,  2/10,  300  yds.  moquctte,  392 
yds.  body  brussels,  400  yds.  ingrain,  1200  yds.  lining. 

June  9.  — Paid  the  invoice  of  J.  II.  Pray  &  Co.,  received  June  2,  $2768.75,  less  2  %. 

June  10.  —  F.  H.  Walling  &  Co.  paid  their  bill  of  June  4,  less  2  %. 

June  ii.  —  Discounted  E.  H.  Smith  &  Co.'s  acceptance  of  June  5,  at  the  City  Bank. 

June  12.  —  Sold  I".  H.  Walling  &  Co.,  on  their  note  at  4  mos.,  with  interest,  600 
yds.  ingrain,  475  yds.  matting,  1200  yds.  lining.  Allowed  them  the  cash  discount 
of  3%- 

June  14. — Bought  of  John  &  James  Dobson,  Philadelphia,  net  30,  2/10,  892  yds. 
body  brussels,  1225  }ds.  tapestry  brussels. 

June  14.  —  Bought  of  Barton  Bros.,  Philadelphia,  net  4  mos.,  8/15,  1500  yds.  linoleum, 
1400  yds.  oilcloth. 

June  15.  —  Knowles  &  Johnson  sent  you,  to  apply  on  account,  T.  H.  Sullivan's  note  in 
their  favor,  dated  Denver,  Colo.,  May  24,  19 — ,  at  90  days,  for  $  742.28,  with  interest. 
Allowed  Knowles  &  Johnson  credit  for  the  face  of  the  note  and  the  interest  accrued  upon 
it  to  date. 

June  15.  —  Paid  John  H.  Pray  &  Co.  invoice  of  June  5,  less  2%. 

June  16.  —  Discounted  the  Sullivan  note,  received  of  Knowles  &  Johnson,  at  the  City 
Bank.     (This  is  an  interest-bearing  note.) 

June  16.  — Sold  J.  G.  Carter  &  Co.,  on  acct.,  not  60,  2/10,  600  yds.  linoleum,  4S0  yds. 
oilcloth. 

June  17.  —  Drew  for  private  use,  S  i  50. 

June  17.  —  Paid  clerks,  375. 

June  18.  —  Sold  E.  H.  Smith  &  Co.,  on  their  acceptance  at  30  days,  212  yds.  axminster, 
305  yds.  velvet,  250  yds.  tapestry  brussels. 

June  18.  —  Knowles  &  Johnson  paid  the  balance  due  on  their  bill  of  June  8,  less  2% 
of  the  entire  bill. 

June  18.  — Paid  note  (dated  June  3)  and  interest  favor  of  Barton  Bros,  due  this  day. 

June  21. — Sold  ]■"..  B.  Ailing  &  Co.,  net  30,  2/10,  420  yds.  moquette,  280  yds.  body 
brussels,  800  yds.  lining. 

June  21.  —  Discounted  F.  H.  Walling  &  Co.'s  note  of  June  12  at  the  bank. 

June  22.  —  Bought  of  John  H.  Pray  &  Co.,  Boston,  net  60,  3/10,  897  yds.  moquette, 
174s  yds.  ingrain,  2400  yds.  lining. 

June  23.  —  Bought  of  James  Smith  &  Co.,  New  York,  subject  to  sight  draft  in  10  days, 
722  yds.  axminster,  941  yds.  velvet. 

June  23.  —  Paid  John  &  James  Dobson's  invoice  of  June  14,  less  discount. 

June  24.  —  Sold  Reed  &  Savage,  on  their  acceptance  at  10  days,  less  2%,  400  yds. 
moquette,  712  yds.  body  brussels,  1 200  yds.  lining. 

June  25.  —  l^ought  of  John  &  James   Dobson,  Philadelphia,  1892  yds.  body  brussels. 


GENERAI,    REVIKW  —  JUN'K 


137 


671  yds.  moquette,  3200  yds.  mattintc-  Gave  in  part  payment  your  note  at  4  mos.  for  one- 
half  the  amount  of  the  invoice;  the  balance  on  account,  4  mos. 

June  26.  —  Sold  Knowles  &  Johnson,  net  4  mos.  2/15,  920  yds.  linoleum,  1220  yds. 
oilcloth,  43  yds.  axminster. 

June  28.  —  Sold  F.  II.  Walling  &  Co.,  net  30,  2/10,  698  yds.  moquette,  792  yds.  body 
brussels,  1500  yds.  lining. 

June  28.  —  Sold  E.  B.  Ailing  &  Co.,  net  30,  2/10,  390  yds.  moquette,  822  yds.  body 
brussels,  975  yds.  tapestry  brussels. 

June  29.  —  Paid  Barton  Bros.'  invoice  of  the  14th  inst.,  less  8%. 

June  30.  —  E.  B.  Ailing  &  Co.  desired  to  take  advantage  of  2  %  discount  on  their  pur- 
chase of  June  21,  but  being  short  of  money,  they  sent  5  1000  to  apply  on  account,  with 
the  understanding  that  they  are  to  be  allowed  the  discount  on  so  much  of  the  bill  as  this 
amount  will  pay  for. 

J-une  30.  —  Paid  clerks,  $75.     Paid  freight  bills  to  date,  $68.92. 

INVENTORY 

310  yds.  moquette,  1745  yds.  ingrain,  1450  yds.  lining,  722  yds.  a.xminster,  500  yds. 
tapestry  brussels,  678  yds.  body  brussels,  3525  yds.  matting,  700  yds.  oilcloth,  941  yds. 
velvet,  600  yds.  linoleum,  at  cost  price;  office  furniture,  valued  at  $225. 

Cost  and  Selling  Price  Lists  —  General  Review 


Cost 


1,87^ 
1.05 

.62'^ 

.061 

.67= 

•33^ 
1 .  1 2- 

•335 
.661 

1-37' 


Axminster 
Body  Brussels     . 
Ingrain 

Lining  .... 
Linoleum  . 
Matting  .  .  . 
Moquette  . 
Oilcloth  .  .  . 
Tapestry  Brussels 
Velvet  .... 


2.25 
1.50 

•87- 
.og 

■75 

.50 

1 .62-^ 

•45 

•87- 

1.67- 


2.27 

1.48 
•87- 

.oS 
.76 

•52 
I.62-: 

•43 

.87- 

1.67- 


2.26 
1.49 

•87- 
.10 

•74 

•51 

1.665 

•44 

•87- 

1.66I 


2.24 
1.52 
.87^ 
.08^ 

•77 
.48 
1.62= 
.42 
.87 

1 .62-' 


2.25 
1.50 
•87 
•09' 
•75 
•49 
i.66i 

■45 

.87- 

1.67-^ 


48 

87- 
09 

73 

50 

67- 

43 

87- 

661 


2.27 

1.50 

.86 

.10- 

•75 
.52 

1.62- 
•44 
.87- 

I.62-; 


25 

53 

,87^ 

.09 

74 

50 

66| 

45 

87- 

67"- 


2.30 
1.48 
.88 
.09-' 

•5' 

I.62-' 

.46 

•87^ 
1.62- 


10 


2.24 
50 
87- 
,09 
76 

49 

67^ 

42 

87- 
67^ 


QUESTIONS 

1.  What  is  a  draft,  and  what  names  are  given  to  the  parties  to  a  dral't? 

2.  What  is  a  sight  draft ?     A  time  draft? 

3.  What  should  be  the  drawer's  entry  when  a  draft  with  three  parties  is  drawn? 

4.  What  should  be  the  payee's  entry  for  a  sight  draft  paid? 

5.  What  should  be  the  drawee's  entry  for  a  sight  draft  paid? 

6.  What  is  meant  by  '"accepting"  a  draft,  and  what  agreement  does  it  constitute? 

7.  What  should  be  the  payee's  entry  when  a  time  draft  has  been  accepted? 

8.  What  should  be  the  drawee's  entry  when  he  accepts  a  time  draft? 

9.  When  drafts  are  made  for  tlie  collection  of  debts,  to  whose  order  are  tlu-y  generally  payable?  ' 

10.  What  should  be  the  drawer's  entry  when  such  a  draft  is  honored  if  it  is  a  sight  dral't?     What  entry  if 
it  is  a  time  draft  ? 

11.  Define  a  bank  draft  and  explain  its  use. 


138  MODERN   ILLUSTRATIVE  BOOKKEEPl.VG 

12.  To  whose  order  should  a  bank  draft  be  made? 

13.  How  should  a  bank  draft  be  indorsed? 

14.  Explain  the  use  of  the  invoice  book. 

15.  To  what  account  should  the  footing  of  the  money  column  of  the  invoice  book  be  posted?     To  which 
side  of  the  account,  and  why? 

16.  Explain  the  use  of  the  bill  book. 

17.  What  are  articles  of  copartnership,  and  how  should  they  be  prepared? 

18.  When  should  Interest  be  credited? 

19.  What  is  meant  by  a  shipment? 

20.  Give  the  rules  for  debiting  and  crediting  a  Shipment  account. 

21.  Under  what  circumstances  would  a  bank  receive  a  sight  draft  on  deposit?  Suppose  it  were  not  paid, 
what  would  the  bank  do? 

22.  When  should  Discount  be  credited? 

23.  When  should  Interest  be  debited? 

24.  Explain  how  to  verify  the  bill  book. 

OPENING    ENTRIES 

In  opening^  a  set  of  books,  first  make  a  complete  statement  of  the  resources  and  liabilities 
of  the  business.  The  resources  will  consist  of  Cash  in  drawer  and  in  bank,  all  forms  of 
property  in  the  possession  of  the  business,  such  as  merchandise,  materials,  furniture  and 
fi.xturcs,  real  estate,  machinery  and  tools,  etc.,  and  all  debts  due  the  business  either  on 
personal  accounts,  generally  spoken  of  as  accounts  receivable,  or  on  notes,  called  bills  receiv- 
able. There  should  also  be  included  under  the  resources  any  other  items  of  indebtedness 
due  the  business,  such  as  accrued  interest  on  bills  receivable,  prepaid  insurance,  etc. 

The  liabilities  of  a  business  consist  of  all  it  owes.  This  indebtedness  may  be  either  on 
personal  accounts,  which  are  called  accounts  payable,  or  on  notes,  known  as  bills  payable. 
There  may  also  be  other  iteiris  of  debt  owing  by  the  business,  such  as  unpaid  rent,  accrued 
interest  on  bills  payable,  etc. 

The  difference  between  the  simi  of  the  resources  and  the  sum  of  the  liabilities  repre- 
sents the  net  investment,  or  net  capital,  of  the  business.  This  difference  should  be  added 
to  the  list  of  the  liabilities  of  the  business,  since  it  is  the  amount  which  the  business  owes  to 
the  proprietor  or  partners. 

After  this  statement  of  resources  and  liabilities  is  completed,  it  is  easily  journalized  by 
the  following  rule : 

Debit  the  resources  and  cirdit  tlic  liabilities. 

This  rule  will  make  a  complete  journal  entry  of  any  opening  statement,  since  the 
resources  and  liabilities  of  every  business  are  made  equal  by  considering  the  net  capital, 
or  present  worth,  as  a  liability  to  the  business. 

By  this  method,  the  opening  statement  of  the  resources  and  Liabilities  of  any  business  is 
included  in  one  journal  entry. 

If  desired,  however,  a  separate  entry  may  be  made  for  the  resources  and  another  one 
for  the  liabilities.     In  this  case  the  rule  would  be : 

Debit  the  resources  and  credit  the  p7-oprictorfor  the  total ;  erj-dit  the  liabilities  and  debit  the 
proprietor  for  the  total. 

The  opening  entry  of  a  business  is  placed  in  the  journal,  the  cash  being  included  in  this 
entry  as  a  matter  of  convenience  and  to  show  the  complete  investment  in  one  entry.     The 


OPENING    ENTRIKS 


139 


cash  investment  is  entered  also  in  the  cash  book,  but  is  checked  off  so  that  it  will  not  be 
posted  a  second  time  to  the  credit  of  the  proprietor  or  partners.  In  the  journal  the  cash 
debit  is  checked  off  when  the  entry  is  made  in  the  cash  book. 

Investment  of  Single  Resource  by  Sint/le  Proprietor 

This  is  the  simplest  kind  of  opening  transaction.     The  form  of  the  entry  required  has 
been  shown  in  previous  work.     (See  pages  6,  lo,  and  75.) 

Investment  of  Several  liesoiirres  by  Single  Proprietor 

Make  on  journal  paper  the  opening  entries  (journal  and  cash  book)  for  the  following: 
I.     Geo.  W.  Carter  begins  the  Coffee,  Tea,  and  Spice  business  this  day  with  the  following 

resources  :  Cash  on  hand  and  in  bank,  $  385  ;  mdse.  as  per  inventory,  $  1250;  store  fi.xtures, 

^275  ;  Jno.  Harper  owes  on  acct.,  $25. 

The  entry  below  illustrates  the  proper  form  of  journal  entry. 


G.  T.  Berrv  has  this  day  I  commenced  the  Tea,  Coffee, 
and  Spice  business  at  309  E  Im  St.,  investing  resources  as 
follows : 


Cash 
Mdse. 

Store  Fixtures 
Jno.  Harper 

G.  T.  Berry 


on  hand  and  in  bank 

per  inventory 
((  (( 

on  acct. 
investment 


400 

1500 

300 

50 


2250 


Do  not  neglect  to  check  off  the  cash  investment  entry  in  both  journal  and  cash  book. 

2.  James  Wooley  begins  business  with  the  following  resources:  Cash  in  safe,  S125; 
cash  in  bank,  ;$367S;  store  building  and  lot,  $5000;  goods  per  inventory,  $2500;  Harry 
Altenau  owes,  $140;  Daniel  Jenkins  owes,  $320;  note  of  Davis  Bros,  per  B.  B.,  S627.50; 
interest  accrued  on  above  note  to  date,  $6.28. 

3.  E.  M.  Harrigan  begins  business  with  these  resources:  Cash  in  bank,  $3750;  mdse. 
as  per  inventory,  §5378;  office  safe,  $375;  typewriter  and  other  office  furniture,  $200; 
building  and  lot  partially  occupied  by  business,  $7000.  The  following  firms  owe  Harrigan 
on  acct:  Harrison  Loeb,  $126;   Fay  &  Eagan  Co.,  $75.84;  Jones  Bros.  Co.,  $186.75. 


Investment  of  Resources  and  Uabilities  by  Single  Proprietor 

4.  J.  W.  Jones  has  this  day  opened  a  Wood  and  Coal  business  at  125  W.  Fifth  St.,  with 
the  following  resources  and  liabilities  : 

Resources.  —  Cash  on  hand  and  in  bank,  $675.50;  mdse.  as  per  inventory,  $  1672.25  ; 
horses  and  wagons  valued  at  $570;  S.  M.  Blue  on  account,  $72.50;  J.  D.  Simpson  on 
account,  $45. 

Li.\BiLiTiES.  —  Due  Jno.  Solzer  &  Co.,  on  account,  $395;  due  H.  C.  Bailey  on  30  da. 
note,  $  500. 


140  MODERN   ILLUSTRATIVE   BOOKKEEPING 

The  following  illustrates  the  form  of  journal  entry  required. 


Cash 

Mdse. 

Horse  &  Wagon 

E.  H.  Beel 

E.  L.  Schuler 

R.  E.  Brown  &  Co. 

Bills  Payable 

J.  W.  Smith 


on  hand  and  in  bank 
per  inventory 

on  account 


30  da.  note 
net  investment 


700 

•345 
590 

SO 


4.30 
600 

1758 


5.  V.  C.  Taylor  commenced  business  with  cash,  55000;  real  estate,  $12,000;  mdse., 
§8500;  note  for  $1500  against  J.  Wilson,  with  accrued  interest,  S  10.50;  note  for  $600 
against  A.  R.  White,  with  interest  accrued,  $7.20;  due  from  D.  D.  Jones  on  account,  S  175, 
and  from  J.  C.  Henry,  S375.  Taylor  owes  on  a  note  to  Carl  D.  Stciner,  S460;  interest 
accrued  on  this  note,  $9;  Taylor  owes  on  account  to  Brown  &  Jones,  $1265.50,  and  to 
Jacob  J.  Anstead,  $324.75. 

Opening  Entries  of  Partnerships 

6.  Harry  Peck  and  Joseph  Long  form  a  partnership  under  the  firm  name  of  Peck  &  Co., 
for  the  ])urpose  of  conducting  the  Furniture  business.  Peck  invests  cash  $  5000,  and  Long 
invests  $3000. 

Make  the  entry,  debiting  cash  for  the  total  amount  of  money  invested,  this  being  the 
resource  at  beginning,  and  crediting  the  partners  for  their  respective  investments. 

7.  John  Shalcr,  Henry  Desmond,  and  J.  C.  Cunningham  have  formed  a  partnership 
under  the  style  of  Shaler,  Desmond  &  Co.,  to  carry  on  the  dry  goods  business.  Their  in- 
vestments are  as  follows: 

Shaler  invests  cash,  $3000;  stock  of  goods,  $2000;  sundry  personal  accounts  due  him 
amounting  to  $1500;  and  Henry  Gorman's  note,  $500,  with  accrued  interest,  $5. 

Desmond  invests  cash,  $2000;  store  building  and  lot,  $7000. 

Cunningham's  investment  consists  of  cash,  $1500,  and  50  shares  of  Pa.  R.  R.  stock  at 
the  market  value  of  Si 20  per  share. 

Make  one  entry  for  the  entire  opening  transaction,  debiting  resources  and  crediting 
liabilities.  The  only  liabilities  in  this  case  are  to  the  three  partners  for  the  amount  of  their 
investments.      Debit  Airoiiiits  Rcccivalilc  for  the  total  of  personal  accounts  due. 

8.  Thomas  Bender  and  J.  B.  Potter  have  this  day  formed  a  partnership  and  will  here- 
after conduct  their  respective  businesses  as  one  business  under  the  style  of  Bender  &  Potter. 

Bender's  statement  of  resources  and  liabilities  is  as  follows : 

Resources. — Cash  on  hand,  $1000;  stock  of  groceries,  $1125;  outstanding  accounts, 
$395  ;  store  and  office  fixtures,  $890;  office  furniture,  $250. 

Li.VBiLiTiEs.  —  Due  sundry  creditors  on  account,  $500;  notes  outstanding,  $750. 

Potter's  statement  is  as  follows : 

Resources.  —  Cash,  $1500;  stock  of  coffee,  tea  and  spices,  $2000;  store  lot  and  build- 
ing, $6000;  rent  due  on  part  of  storeroom,  $200. 

Li.\BiLiTii:s.     -Due  creditors  on  account,  Si  500;  mortgage  on  store  building,  S  3000. 

Make  entry  for  the  opening  statement  of  the  new  firm.  Credit  Accounts  Payable  for  the 
total  due  creditors.     Credit  Mortgages  Payable  for  the  mortgage. 


SUPPLEMENTARY   EXERCISE  — JUNE   ANT)   JULY  141 


SUPPLEMENTARY    EXl' RCISE  — No.   4 

HARDWARE    BUSINESS 

The  books  to  be  used  in  this  set  are  journal,  cash  book,  chock  book  (stub  only),  sales 
book,  and  ledger.      Use  loose  journal  and  ledger  paper  for  the  work. 

The  accounts  to  be  kept  in  the  ledger  are  similar  to  those  in  previous  work,  with 
two  exceptions:  (i)  Instead  of  keeping  two  separate  accounts  called  hitcrcst  and  Dis- 
count, keep  only  one  Interest  and  Discount  account,  including  all  items  such  as  have 
been  previously  included  in  Interest  account  or  in  Discount  account.  (2)  A  new  account, 
called  Collection  and  Exchange,  is  kept,  to  include  allowances  made  for  collecting  and 
transmitting  money. 

Give  Merchandise,  Expense.  Interest  and  Discount.  Collection  and  E.xchange.  Rills  Receivable,  and  Bills 
Payable  each  one-half  page  space  in  the  ledger,  and  all  other  accounts  each  one-fourth  of  a  page  space.  In 
opening  personal  accounts,  give  the  place  of  business. 

TRANSACTIONS 

Jl'ne  I.  —  "Student"  and  Geo.  D.  Whitney  have  this  day  formed  a  co-partnership, 
under  the  inrm  name  of  "Student"  &  Co.,  and  have  leased  of  H.  N.  Smith  the  store  No. 
1466  Main  Street,  at  $  1200  per  year,  rent  payable  monthly  in  advance,  for  the  purpose  of 
carrying  on  the  hardware  business.  The  gains  and  losses  of  the  business  are  to  be  shared 
equally. 

"Student"  invests  the  following  resources:  Cash  paid  in,  $1500;  Geo.  B.  Gordon, 
City,  on  account,  §1600;  A.  G.  Steele  &  Co.,  City,  on  account,  $954.50;  Sewell  &  Clark, 
Greenville,  on  account,  $1050.75;  Wm.  Peet,  City,  on  account,  ;$Soo;  French  &  French, 
Oakland,  on  account,  $375.25  ;  The  Grover  Mfg.  Co.,  North   Bend,  on  account,  S  1625.60. 

The  following  liabilities  of  "  Student "  are  assumed  by  the  firm:  Swift,  Ennis  &  Co., 
City,  on  account,  S918.75  ;  A.  B.  Smith,  Centralia,  on  account,  $411.51  ;  Wells  &  Gard- 
ner, City,  on  account,  $575.84;   D.  B.   Pond  &  Bro.,  Chicago,  on  account,  $1000. 

Geo.  D.  Whitney  invests  cash,  $2500,  and  an  account  of  Carter  &  Weeks,  Plainfield, 
62500. 

June  i.  —  Open  an  account  at  Flour  City  Bank,  and  deposit  cash,  $2000. 

June  i.  —  Buy  of  Hemingway  &  Selden,  City,  on  account,  60  days,  2  %  10  days,  20 
doz.  C.  S.  Axes;  1000  lbs.  B.  Metal;  4  doz.  Hand  Saws;  5  doz.  W.  Wrenches;  10  I.  C. 
Freezers;  6  doz.  Steelyards;  20  doz.  Pore.  Knobs;  20  doz.  Knives  and  Forks;  10  U.  C. 
Wringers  ;  200  lbs.  Washers  ;   10  doz.  A.  E.  Hammers. 

Ask  your  teacher  to  assign  you  a  price-list  number  from  the  lists  shown  on  page  147. 
In  this  work  you  will  be  required  to  find  the  amount  of  the  purchases  as  well  as  of  the  sales. 

Enter  the  above,  and  all  similar  transactions  in  this  exercise,  in  the  journal.  Write  the 
items  and  prices  in  the  explanation  column.  Abbreviate  the  items  as  shown  in  the  record 
of  the  transaction. 

June  i. — ^Pay  H.  N.  Smith  one  month's  rent  of  store,  in  advance,  by  check  (see  first 
transaction,  above). 

June  i. — Sell  E.  Langworthy,  Marcellus,  on  account,  10  days,  2  do/..  W.  Wrenches; 
3  doz.  A.  E.  Hammers;  4  I.  C.  Freezers;  2  doz.  C.  S.  Axes;  200  lbs.  B.  Metal. 

June  2.  —  Sell  Barber  &  Swift,  Georgetown,  on  account,  10  days,   I  doz.  Hand  Saws; 


142  MODERN   ILLUSTRATIVE  BOOKKEEPING 

5  doz.  Knives  and  Forks;  5  doz.  Pore.  Knobs;  i  doz.  Steelyards;  100  lbs.  B.  Metal;  4 
U.  C.  Wringers. 

June  2.  —  Sell  L.  B.  Mason,  City,  on  account,  10  days,  2  doz.  A.  E;  Hammers;  2  doz. 
C.  S.  Axes ;  3  I.  C.  Freezers ;  50  lbs.  Washers. 

June  2.  —  Buy  of  Briggs  &  Son  an  office  safe,  and  pay  for  same  by  check  on  F.  C.  Bank, 
3  225.     (Debit  Office  Fiirnititrc  and  Fixtures  account.) 

June  2.  —  Give  Wells  &  Gardner  check  to  apply  on  account,  S275.84. 

June  2.  —  Receive  of  Wm.  Peet  his  check  on  Traders  Bank  to  apply  on  account, 
S300. 

June  2.  —  Deposit  in  F.  C.  Bank  Ssooin  currency,  and  Wm.  Peet's  check. 

June  3. —  Receive  by  Commercial  Freight  Line  from  Hart,  Bliven  &  Mead,  494  and  496 
Broadway,  New  York,  goods  as  per  invoice  dated  June  i,  19--,  terms,  90  days,  2/30, 
3/10:  25  doz.  Caqjct  Stretchers;  15  doz.  Jack  Planes;  10  doz.  R.  R.  Picks;  10  doz.  Try 
Squares;  25  doz.  Mortise  Locks  ;  15  Copying  Presses  ;  5  doz.  Ratchet  Braces  ;  10  pr.  B.  D. 
Hangers;   5  doz.  P.  G.  Coal  Hods. 

June  3.  —  Sell  French  &  French,  Oakland,  on  account,  10  days,  2  pr.  B.  D.  Hangers; 
5  Copying  Presses ;  2  doz.  Jack  Planes ;  5  doz.  Mortise  Locks ;  2  doz.  R.  R.  Picks ;  3  doz. 
Try  Squares ;  200  lbs.  B.  Metal. 

June  3.  —  Pay  J.  B.  Jones's  bill  for  stationery  supplied  for  office  use  in  cash,  $27.50. 

June  3.  —  Accept,  payable  at  F.  C.  Bank,  D.  B.  Pond  &  Bro.'s  draft,  dated  June  2,  at  3 
days'  sight,  favor  Charles  Green,  $  400. 

June  3. —  Receive  of  G.  B.  Gordon,  on  account,  his  check  on  Merchants  Bank,  S600. 

June  3.  —  Sell  E.  Langworthy,  10  days,  2  doz.  Ratchet  Braces;  5  doz.  Carpet  Stretchers; 
3  doz.  R.  R.  Picks ;  2  doz.  Try  Squares  ;   3  Copying  Presses. 

June  3.  —  Sell  L.  B.  Mason,  10  days,  i  doz.  Hand  Saws;  3  Copying  Pres.ses;  5  doz. 
Knives  and  Forks. 

June  3.  —  Receive  of  Carter  &  Weeks,  on  account,  their  check  on  First  National  Bank 
of  Plainfield,  S500. 

June  3. —  Deposit  currency,  S300;  also  the  checks  of  Gordon  and  Carter  &  Weeks. 
Bank  charges  ^^  %  collection  on  Carter  &  Weeks's  check. 

(Debit  Collection  and  Exchange  in  the  cash  book  for  the  amount  of  the  collection  charge; 
in  this  case  -^'^  %  of  $500=  50  cents.  The  collection  charge  is  an  allowance  to  others. 
The  bank  credits  your  account  with  $499.50;  but  that  is  the  same  as  if  it  gave  you  $500 
and  then  took  back  $.50.  The  rules  governing  Collection  and  Exchange  account  are  like 
those  for  accounts  of  other  allowances,  such  ?s  for  Discount.) 

June  5.  —  Receive  cash  of  Barber  &  Swift,  in  full  of  invoice,  2d  inst. 

June  5. — Sell  Scwell  and  Clark,  Greenville,  on  account,  10  days,  2  doz.  R.  R.  Picks; 
5  doz.  Mortise  Locks ;  5  doz.  C.  S.  A.xes ;  3  pr.  B.  D.  Hangers ;  5  doz.  Pore.  Knobs ; 
5  doz.  Knives  and  Forks ;   5  doz.  Carpet  Stretchers. 

June  5.  —  Receive  of  A.  G.  Steele  &  Co.  their  note  at  60  days,  payable  at  Merchants 
Bank,  to  apply  on  account,  $500. 

June  5.  —  Give  Hemingway  &  Selden  a  check  in  full  of  invoice,  ist  inst.,  less  2%. 

June  6.  —  Your  acceptance  of  3d  inst,  for  $400,  due  to-day,  has  been  presented  at 
F.  C.  Bank,  paid,  and  charged  to  your  account. 

June  8.  —  Receive  of  Pratt,  Conway  &  Mills,  200  kegs  Sd.  Cut  Nails.  Invoice  dated 
June  2.     Terms  cash,  in  10  days. 

June  8.  —  Receive  cash  of  E.  Langworthy,  on  account,  $50. 


SUPPLEMENTARY   EXERCISE  — JUNE  AND   JULY  143 


on 


June  8.  —  Draw  on    Carter  &  Weeks,  at    sight,   for    $500,    your    favor,    to    apply 
account,  and  leave  the  draft  at  F.  C.  Bank  for  collection.     (Memorandum  only.) 

JuxE  8.  —  Sell  Daniels  &  Baker,  Cedar  Grove,  on  account,  10  days,  25  kegs  Cut  Nails; 
3  doz.  Jack  Planes;  3  doz.  C.  S.  Axes;   5  doz.  Mortise  Locks;   200  lbs.  B.  Metal. 

June  9.  —  Receive  of  French  &  French  their  check  on  Farmers  Bank  of  Oakland  on 
account,  $375.25. 

June  9.  —  Deposit  cash  in  F.  C.  Bank,  $200.  Also  French  &  French's  check.  Bank 
charges  -^'fo  collection  on  the  check.     (Sec  deposit  on  June  3.) 

June  10.  —  Receive  by  Commercial  Freight  Line,  from  Hart,  Bliven  &  Mead,  goods 
as  per  invoice  dated  June  8,  terms  90  days,  2/15  :  25  doz.  pairs  Strap  Hinges;  10  U.  C. 
Wringers;  10  doz.  A.  E.  Hammers;  5  doz.  H.  Saws;  15  Copying  Presses;  lO  doz. 
W.  Wrenches;  5  doz.  Ratchet  Braces;  20  doz.  Knives  and  Forks;  10  L  C.  Freezers;  20  pr. 
B.  D.  Hangers;   10  doz.  Steelyards;  5  doz.  C.  S.  Axes. 

June  10.  —  Receive  of  Grover  Mfg.  Co.,  to  apply  on  account,  their  draft  for  $1000, 
dated  June  8,  at  15  days'  sight,  on  Colton  &  Reese,  this  city,  which  they  have  accepted  this 
day,  payable  at  F.  C.  Bank.     Indorse  the  acceptance,  and  leave  it  at  F.  C.  Bank  for  collection. 

June  12.  —  Buy  at  F.  C.  Bank  by  check,  at  |%  exchange,  a  draft  on  Exchange  Nat. 
Bank,  New  York,  and  remit  the  same  to  Hart,  Bliven  &  Mead,  in  full  of  invoice  Mdsc. 
received  3d  inst.,  less  3%. 

(Debit  Collection  and  Excliangc  for  the  bank's  charges.  Reckon  exchange  on  the 
amount  remitted.      Exchange  is  an  allowance.) 

June  13.  —  Receive  of  French  &  French  their  check  on  Farmers  Bank  of  Oakland 
for  invoice,  3d  inst. 

June  13.  —  Receive  of  L.  B.  Mason  his  check  on  Traders  Bank  for  invoice,  3d  inst. 

June  13.  — Sell  C.  B.  Shafer,  Gasport,  3  doz.  C.  S.  Axes;  2  doz.  P.  G.  Coal  Hods; 
3  doz.  W.  Wrenches;  4  doz.  Ratchet  Braces;  2  doz.  Jack  Planes;  5  Copying  Presses. 
Receive  cash,  $75;  balance  on  account,  10  days. 

June  13.  —  Deposit  currency,  $  100,  also  checks  of  French  &  French  and  L.  B.  Mason; 
bank  deducts  ^^^  %  for  French  &  French's  check. 

June  15.  —  Pay  Hamilton  &  Groves's  bill  for  office  desk,  by  check,  $  100. 

JuNe  15.  —  Receive  by  C.  N.  Line  from  D.  B.  Pond  &  Bro.,  Chicago,  goods  as  per  in- 
voice dated  June  8,  terms  60  days  :   100  Grindstones  ;   50  Blacksmiths'  Drills. 

June  15.  —  Sell  E.   Langworthy  on  account,  10  days,  25  kegs  Cut  Nails;  5  B.  S.  Drills; 

5  doz.  pr.  Strap  Hinges ;  2  doz.  P.  G.  Coal  Hods  ;   50  lbs.  Washers. 

June  15.  —  Receive  of  Sewell  &  Clark  their  check  on  First  Nat.  Bank  of  Greenville,  in 
full  for  invoice  of  5th  inst. 

June   15. — -Deposit  Sewell  &  Clark's  check.     Bank  charges  j^q  %  collection. 

June   17.  — Pay  A.  B.  Smith's  sight  draft  on  you,  dated  June  15th,  favor  A.  M.  Purdy 

6  Co.,  $  200,  by  check. 

June  17.  —  Receive  credit  at  F.  C.  Bank  for  the  $500  draft  on  Carter  &  Weeks,  left 
for  collection  on  the  8th  inst.,  less  charges  for  collection,  \  %. 

June  18.  — Buy  a  draft  on  New  York  at  F.  C.  Bank,  by  check,  at  ]  %  exchange,  and 
remit  it  to  Pratt,  Conway  &  Mills,  in  full  of  invoice  of  Mdse.  received  on  the  8th  inst. 

(See  instructions  for  remitting  to  Hart,  Bliven  &  Mead,  12th  inst.  In  this  case,  however, 
there  is  no  discount  allowed. ) 

June  18.  —  Receive  of  Daniels  &  Baker  their  check  on  Citizens  Bank,  Cedar  Grove, 
for  invoice  8th  inst. 


144  Muni.KN  u.i.lstkativf;  nnnKKt:ErixG 

June  i8.  —  Sell  Barber  &  Swift,  for  cash,  50  kegs  Cut  Nails. 

(Debit  Barber  ami  Sivift  in  sales  book  and  credit  them  in  cash  book.) 

June  18.  —  Deposit  currency,  §300,  and  Daniels  &  Baker's  check.  Bank  charges  -^^  % 
collection  on  the  check. 

June  19.  —  Discount,  at  F.  C  Bank,  A.  G.  Steele  &  Co.'s  note,  received  5th  inst. ; 
receive  credit  for  the  proceeds. 

June  20.  — Geo.  D.  Whitney  draws  from  the  business  for  individual  use,  by  check,  S  350. 

June  20.  —  Remit  Hart,  Bliven  &  Mead  a  draft  on  New  York  for  invoice  of  goods 
received  loth  inst.,  less  2  %  discount;  buy  the  draft  at  F.  C.  Bank  by  check.  E.\- 
change  \  %. 

June  23.  —  Pay  Wells  &  Gardner  cash  to  balance  account. 

June  23. — Sell  French  &  French  on  account,  10  days,  5  B.  S.  Drills;  10  Grindstones; 
5  doz.  Pore.  Knobs;  3  doz.  W.  Wrenches;  2  doz.  C.  S.  Axes;  100  lbs.  B.  Metal;  5  doz.  A.  E. 
Hammers  ;  4  Copying  Presses. 

June  25.  —  Pay  Barton  &  Co.'s  bill  for  coal  for  use  of  store,  in  cash,  S  50. 

June  26.  —  Student  takes  from  the  stock  for  his  individual  use,  to  be  charged  to  him  at 
COST,  1  I.  C.  P'reezer ;   i  doz.  Knives  and  Forks ;   i  U.  C.  Wringer. 

June  28.  —  Receive  cash  of  A.  G.  Steele  &  Co.  to  balance  account. 

June  28.  —  Deposit  cash  in  F.  C.  Bank,  S400;  also  receive  credit  for  the  acceptance  of 
Colton  &  Reese,  which  was  left  the  loth  inst.  for  collection,  and  has  been  paid.  (This  paper 
being  payable  in  the  city,  the  bank  makes  no  charge  for  collection.) 

June  28.  —  Accept,  payable  at  V.  C.  Bank,  D.  B.  Pond  &  Bro.'s  draft,  dated  June  22, 
at  3  days'  sight,  favor  Charles  Green,  $600. 

June  29.  —  Pay  freight  bills  for  the  month,  in  cash,  $35.50. 

June  30.  —  Pay  salaries  of  employees  for  the  month,  in  cash,  $  100. 

Close  the  cash  book,  rule  and  foot  the  journal  and  sales  book,  and  post.  Take  off  a 
trial  balance  by  differences  (no  statements  are  required  and  no  accounts  are  to  be  closed), 
and  hand  in  books  and  trial  balance  for  approval. 

July  i.  —  Receive  of  C.  B.  Shafer  his  check  on  East  Side  Banking  Co.,  City,  to  balance 
account. 

Jui.v  I.  —  Your  acceptance  of  June  28  for  S600,  due  to-day,  has  been  paid  at  F.  C. 
Bank  and  charged  to  your  account. 

JULV  I.  — Sell  Daniels  &  Baker,  at  10  days,  5  doz.  Steelyards  ;  10  Grindstones ;  2  doz. 
C.  S.  Axes;  5  doz.  M.  Locks;  5  U.  C.  Wringers. 

Jui.v  i.  —  Receive  cash  of  L.  B.  Mason,  in  full  of  account. 

Jui.v  i.  —  De])osit  cash,  S300,  and  Shafer's  check. 

JuLV  I.  —  Draw  on  E.  Langworthy  at  sight,  in  full  of  his  account,  and  leave  the  draft 
for  collection. 

July  2.  —  Receive  a  letter  from  Hart,  Bliven  &  Mead,  expressing  regret  that  the  coal 
hods  in  their  first  invoice  were  not  satisfactory,  and  informing  you  that  a  reduction  of  S  10 
has  been  allowed  and  the  amount  placed  to  your  credit. 

(Debit  //a>t,  Bliven  &  Mead,  and  credit  M'dse.  in  the  journal  for  the  amount  allowed.) 

July  3. —  Receive  of  Sewell  &  Clark  their  note  dated  June  15th,  at  60  days,  payable  at 
First  Nat.  Bank,  Greenville,  in  full  of  their  account  and  60  days'  interest  on  same. 

(Instead  of  writing  an  interest-bearing  note,  they  have  given  you  a  note  for  an  amount 
equal  to  the  original  debt  plus  interest  on  the  same  from  June  15  to  maturity  of  note.) 


SUPPLEMENTARY   EXERCISE  — JUNE  AND  JULY  145 

July  3.  —  Give  H.  N.  Smith  a  check  for  one  month's  rent  of  store,  in  advance  (p.  141). 

July  3.  —  Receive  by  Commercial  F.  F.  Line,  from  Hart,  Bliven  &  Mead,  goods  as  per 
invoice  dated  July  i,  terms,  cash  in  10  days:  10  doz.  P.  G.  Coal  Hods;  5  doz.  C.  S.  Axes; 
10  doz.  Hand  Saws;  15  doz.  Pore.  Knobs;  10  doz.  R.  Braces;  5  doz.  R.  R.  Picks;  5  doz. 
Try  Squares ;  5  doz.  \V.  Wrenches ;  200  lbs.  Washers. 

July  3.  —  Sell  Barber  &  Swift,  at  10  days,  5  doz.  C.  S.  A.xes;  10  doz.  Pore.  Knobs; 
100  lbs.  Washers;  4  doz.  R.  Braces;  5  B.  S.  Drills. 

July  6.  —  Sell  L.  B.  Mason,  at  10  days,  5  doz.  Knives  and  Forks;  10  kegs  Cut  Nails; 
50  lbs.  B.  Metal ;  3  doz.  R.  R.  Picks ;  5  doz.  pr.  Strap  Hinges ;  2  doz.  A.  E.  Hammers. 

July  6.  —  Receive  of  Wm.  Peet  his  check  on  Traders  Bank,  to  balance  account ;  also 
receive  of  Geo.  B.  Gordon  his  check  on  Merchants  Bank,  to  apply  on  account,  S400. 

July  6.  —  Deposit  the  checks  received  of  Wm.  Peet  and  Geo.  B.  Gordon. 

July  6.  —  Give  Swift,  Ennis  &  Co.  your  check  to  apply  on  account,  S500. 

July  6.  —  Receive  cash  of  French  &  French  in  full  of  invoice,  June  23. 

July  8.  —  Sell  Oliver  &  Brayton,  City,  at  10  days,  3  Copying  Presses;  2  doz.  P.  G.  Coal 
Hods  ;   2  doz.  Try  Squares  ;   50  lbs.  Washers  ;  3  doz.  J.  Planes  ;  2  U.  C.  Wringers. 

July  10.  —  Accept,  payable  at  F.  C.  Bank,  D.  B.  Pond  &  Bro.'s  draft  at  30  days'  sight, 
favor  themselves,  in  full  of  invoice  received  June  15. 

July  io.  —  Deposit  cash  in  F.  C.  Bank,  S250. 

July  10.  —  Pay  June  gas  bill,  in  cash,  S5.25. 

July  ii.  —  Receive,  via  P.  &  W'.  R.  R.,  from  Pratt,  Conway  &  Mills,  100  kegs  Cut 
Nails.     Invoice  is  dated  July  6,  at  10  days. 

July  ii.  —  Receive  cash  of  Geo.  B.  Gordon,  on  account,  $200. 

July  13.  —  Receive  credit  at  F.  C.  Bank  for  draft  on  E.  Langworthy,  left  ist  instant, 
less  charges  for  collection,  j  %. 

July  13.  —  Receive  of  Daniels  &  Baker  their  check  on  Citizens  Bank,  Cedar  Grove,  in 
full  of  invoice,  ist  inst. 

July  13.  —  Deposit  cash,  $200,  and  Daniels  &  Baker's  check.  Bank  charges  collec- 
tion on  check,  iV%- 

July  13. —  Buy  a  New  York  draft  at  F.  C.  Bank,  by  check,  at  -|  %  exchange,  and  remit 
to  Hart,  Bliven  &  Mead,  in  full  of  invoice  received  3d  inst.,  less  amount  charged  to  their 
account  for  allowance  on  coal  hods,  July  2. 

July  14. — Accept,  payable  at  F.  C.  Bank,  A.  B.  Smith's  draft  dated  July  8,  at  5 
days'  sight,  favor  John  H.  Boyd,  in  full  of  account. 

July   15.  —  Receive  cash  of  Barber  &  Swift,  in  full  of  their  invoice  of  3d  inst. 

July  18.  —  Sell  Sewell  &  Clark,  at  10  days,  5  doz.  R.  Braces;  5  doz.  Knives  and 
Forks;  50  lbs.  Washers;  3  Copying  Presses;  25  kegs  Cut  Nails;  3  B.  S.  Drills;  10  Grind- 
stones ;  5  doz.  pr.  Strap  Hinges. 

July  18.  —  Receive  cash  of  L.  B.  Mason,  in  full  of  invoice  of  6th  inst. 

July  18.  —  Sell  A.  G.  Steele  &  Co.,  City,  5  doz.  Pore.  Knobs;  5  doz.  C.  Stretchers;  10 
pr.  B.  D.  Hangers;  3  I.  C.  Freezers;  5  doz.  W.  Wrenches.  Receive  cash,  S50;  balance 
on  account,  10  days. 

July  19.  —  Your  acceptance  of  July  14,  favor  John  H.  Boyd,  due  to-day,  has  been  paid 
and  charged  to  your  account  at  F.  C.  Bank. 

July  20.  —  Receive  cash  of  Oliver  &  Brayton,  in  full  of  invoice  of  the  8th  inst. 

July  20.  —  Deposit  cash  in  F.  C.  Bank,  $300. 

July  20. — Student  draws  from  the  business  for  his  individual  use,  by  check,  $300. 


146  MODERN   ILLUSTRATTVK   BOOKKEEPING 

July  21.  —  Buy  of  Hemingway  &  Selden,  60  days,  2%  10  days,  10  doz.  Hand  Saws; 
10  doz.   W.  Wrenches;   5  doz.  C.   S.  A.xes;    10  doz.  Knives  and  Forks;  20  doz.  M.  Locks. 

July  23.  —  Draw  on  Carter  &  Weeks  at  sight  for  S500  in  your  favor,  and  leave  the 
draft  for  collection. 

Jui.v  24.  —  Discount  at  F.  C.  Bank,  Sewell  &  Clark's  note  received  on  the  3d  inst.  and 
have  the  proceeds  placed  to  your  credit.  The  bank  charges  ]  %  collection  in  addition  to  the 
discount. 

(The  collection,  as  well  as  the  discount,  is  computed  on  the  face  of  the  paper.) 

Jii.v  24.  —  Pay  Pratt,  Conway  &  Mills's  sight  draft  on  you  for  invoice  received  on 
the  I  ith  inst.,  by  check  on  F.  C.  Bank. 

July  26.  —  Pay  freight  bills  for  the  month,  in  cash,  $21.60. 

July  27.—  Sell  E.  Langworthy,  at  10  days,  5  doz.  pr.  S.  Hinges;  5  doz.  W.  Wrenches; 
10  doz.  M.  Locks;  5  pr.  B.  D.  Hangers;  5  doz.  J.  Planes;  i  Copying  Press;  5  doz.  C. 
Stretchers ;  50  lbs.  Washers. 

July  27.  —  Receive  of  Carter  &  Weeks  their  note  dated  July  24,  at  30  days,  payable 
at  Fir.st  Nat.  Bank,  Plainfield,  to  balance  account,  Siooo. 

July  28.  —  Received  cash  of  A.  G.  Steele  &  Co.  for  balance  due  on  invoice  of  the 
1 8th  inst. 

July  29.  —  Receive  credit  at  F.  C.  Bank  for  draft  on  Carter  &  Weeks,  left  23d  inst.,  less 
collection,  |  %. 

July  30.  —  Give  Hemingway  &  Selden  check  in  full  of  invoice  2ist  inst.,  less  2  'Jo. 

July  30.  —  Pay  salaries  of  employees  for  the  month,  in  cash,  S  100. 

July  31.  —  Receive  Sewell  &  Clark's  check  on  First  Nat.  Bank  of  Greenville,  in  full  for 
invoice  of  i8th  inst. 

July  31.  —  Deposit  Sewell  &  Clark's  check  and  all  the  currency  on  hand.  Bank 
charges  -^^  %  collection  on  the  check. 

INVENTORIES,  JULY  31,  19— 
Mdsc.  as  follows.     Inventory  at  buying  price. 

8  doz.  A.  E.  Hammers,  70  Grindstones,  5  doz.  R.  R.  Picks, 

32  B.  S.  Drills,  27  doz.  Hand  Saws,  5  doz.  pr.  Strap  Hinges, 

150  lb.  B.  Metal,  9  I.  C.  Freezers,  10  doz.  Steelyards, 

10  pr.  B.  D.  Hangers,  24  doz.  Knives  and  Forks,  8  doz.  Try  Squares, 
165  kg.  (16,500  lb.)  Cut  Nails,  15  doz.  M.  Locks,  8  U.  C.  Wringers, 

11  doz.  C.  S.  A.xes,  5  doz.  P.  Knobs,  12  doz.  W.  Wrenches, 
5  doz.  Carpet  Stretchers,          9  dt)z.  P.  G.  Coal  Hods,            50  lb.  Washers. 

3  Copying  Presses,  5  doz.  R.  15races, 

Office  Furniture  and  Fixtures.     Office  safe,  S200;  desk,  S  75  ;  total,  $275. 

Fxprnsc.     Coal  on  hand,  $50. 

Copy  the  above  inventories  in  the  journal.  I-"ind  the  value  of  the  mdse.  by  using  your 
buying  price  list. 

You  will  now  balance  the  cash  book,  foot  the  sales  book,  and  complete  the  posting, 
after  which  make  business  and  financial  statements.  If  your  teacher  wishes,  make  also  a 
balance  sheet  of  the  kind  described  on  page  148. 

Close  the  ledger,  and  hand  your  books  and  statements  to  the  teacher  for  approval. 


surrLEMExrAKV  exi:rcise— junp:  axd  julv 


147 


Buying  Price  Lists  for  Jim:  and  July 


No.  1 


Adz  Eye  Hammers  .  . 
Bl.icksmiths'  Drills  .  . 
Babbitt  Metal  .... 
Barn  Door  Hangers  .  . 
Cut  Nails,  8d.,  loo  lb.  ke 
Cast  Steel  Axes  .  .  . 
Carpet  Stretchers  .  .  . 
Copying  Presses    .     .     . 

Grindstones 

Hand  Saws,  26  in.  .  . 
Ice  Cream  Freezers    .     . 

Jack  Planes 

Knives  and  Forks  .  .  . 
Mortise  Locks  .... 
Porcelain  Knobs  .  .  . 
Plain  Galv'd  Coal  Hods 
Ratchet  Braces .... 
Rail  Road  Picks.  8  lb.  . 
Strap  Hinges,  8  in.     .     . 

Steelyards 

Try  Sqnares,  8  in. . 
Universal  Clothes  Wringers 
Wrought  Wrenches  .     . 
Washers,  i  in 


4.75  doz. 
5.00  each 

.I2j  lb. 
3.00  pr. 

.031  lb. 
10.00  doz. 

2.2-5   (^'o^- 

4.50  each 

1.50  each 
15.00  doz. 

4.00  each 

5.00  doz. 

4.00  doz. 

2.25  doz. 

.75  doz. 

10.00  doz. 

8.75  doz. 

6.50  doz. 

3.00  dz.  pr. 

6.50  doz. 

3.50  doz. 

4.00  each 

11.50  doz. 

.06  lb. 


2 

3 

4 

5 

6 

7 

8 

9 

4.60 

4-55 

4.65 

4.50 

4.60 

4-55 

4-75 

4.60 

5.00 

5-25 

4.90 

5.00 

4.90 

4-95 

4.90 

5.00 

.12 

.12.', 

.11 

.12 

.11,1 

.12,1 

.12 

.1 1 

1.90 

1-75 

I. So 

1.90 

'•75 

2.00 

1.80 

1-75 

•03 

•03i 

.03.} 

.04 

•03  i 

-03  J 

•03:; 

-03 

9.00 

9.25 

g.oo 

9.50 

9.00 

9.25 

9.50 

10.00 

2.10 

2.00 

2.05 

2.50 

2.25 

2.00 

2.20 

2.25 

4.00 

3-90 

3  95 

4.00 

4-25 

3-90 

3^95 

4.00 

1.40 

1.50 

1.40 

1-35 

1-45 

1.50 

1.40 

1-45 

14.00 

13-50 

14.25 

14.00 

13-25 

13.50 

14.00 

14.50 

3-75 

3.60 

3-5° 

3.60 

3-75 

4.00 

3.60 

3-75 

5.00 

4.90 

4.85 

4-75 

4.80 

4.90 

5.00 

4-95 

4.00 

3.80 

3-9° 

3-75 

3-9° 

3-«5 

4.00 

3-75 

2.10 

2.00 

2.05 

2.00 

2.05 

2.10 

2.25 

2.10 

■75 

.70 

•75 

.65 

.70 

•75 

.70 

-75 

9.50 

10.00 

10.25 

9-75 

10.00 

9.50 

9.25 

9-75 

8. 50 

8.10 

8.50 

8.25 

8.50 

8.75 

8.50 

8.25 

6.25 

6.20 

6.25 

6.00 

6.25 

6=0 

6.50 

6.20 

2.90 

2.75 

3.00 

2  75 

2.90 

3.00 

2-75 

2.80 

6.40 

6.35 

6.40 

6.30 

6.40 

6.35 

6  50 

6.40 

3-25 

3.00 

3-25 

3.00 

3.50 

3-25 

3-50 

3.00 

4-25 

4.00 

4.10 

4.00 

4-25 

4.10 

4.50 

4-25 

11.25 

10.00 

10.50 

10.00 

10.25 

10.75 

1 1 .00 

11.25 

.05 

.04J 

-OS  J 

■OS 

•05  i 

.06 

.06J 

-05i 

10 

4.50 

5-2S 
.iii 
1.90 
.04 
9.25 
2.10 
3^90 
'•35 
1^00 

3-50 
4.80 

3-90 

2.05 

.70 

9.50 

8.50 

6.50 

2.90 

6.45 

3-25 

4.50 

1 1. 00 

.06 


Selling  Price  Lists  for  June  and 

July 

No.  1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

Adz  Eye  Hammers    .... 

5.7s  doz. 

5-75 

5.70 

5-75 

5.50 

5-55  \ 

5-50 

5.60 

S-50 

5.40 

Bl.acksmiths"  Drills    .... 

6.00  each 

6.25 

6.10 

5.80 

5-90 

5-75 

5.S0 

5^75 

5-90 

6  00 

Babbitt  Metal 

.15  lb. 

-15 

..61 

-14 

.14J 

.14 

-15 

•14 

•'3i 

•14 

Barn  Door  Hangers  .... 

2.50  pr. 

2.50 

=•331 

2.25 

2-35 

2.20 

2.45 

2.25 

2.10 

2.30 

Cut  Nails,  8d.,  100  lb.  keg  .     . 

.04  lb. 

•04^ 

■04l 

.04 

.05 

.04} 

.05 

.05 

.04 

.05 

Cast  Steel  A.xes 

12.50  doz. 

12.25 

11.75 

11.50 

12.00 

1 1.60 

11.75 

12.00 

12.50 

11.75 

Carpet  Stretchers 

3.00  doz. 

3.10 

3-25 

2-75 

3-00 

2.90 

2-75 

2.95 

3-00 

3^i5 

Copying  Presses 

5.50  each 

5-25 

5.00 

4-75 

4.85 

5.00 

4.80 

4.S5 

4-75 

4.40 

Grindstones 

2.25  each 

2.25 

2.00 

2.10 

2.00 

2.15 

2.25 

2.15 

2.20 

2.10 

Hand  Saws,  26  in 

iS.oo  doz. 

18.00 

17.00 

17.50 

17.00 

16.75 

16.85 

17.00 

17.25 

18.00 

Ice  Cream  Freezers    .... 

5.00  each 

5.00 

4-75 

4.50 

4.60 

4-75 

4-95 

4.50 

4.70 

4.25 

Jack  Planes 

6.00  doz. 

6.25 

5-75 

S-70 

5.60 

5-75 

5-85 

S-75 

5.50 

5.40 

Knives  and  Forks 

5.00  doz. 

S-25 

5-20 

4.80 

4-75 

4-85 

4.80 

4.90 

4-75 

4.80 

Mortise  Locks 

3.00  doz. 

3.00 

2-7S 

2.70 

2.65 

2.70 

2-75 

2.8s 

2.70 

2.65 

Porcelain  Knobs 

1.25  doz. 

1.30 

1-25 

1.20 

1. 15 

1.20 

1.25 

1.20 

1.2s 

1.15 

Plain  Galv'd  Coal  Hods      .     . 

12.50  doz. 

12.25 

12.00 

12.50 

11.75 

12.25 

U.50 

11.00 

12.00 

11,75 

Ratchet  Braces 

10.75  ''o^- 

10.75 

10.10 

10.50 

10.25 

10.50 

I0.7S 

10.50 

10.75 

10.50 

Rail  Road  Picks,  8  lb.    .     .     . 

9.00  doz. 

9.00 

8-75 

8.S0 

8. 50 

8-75 

S.70 

8.65 

8.50 

8-75 

Strap  Hinges,  S  in 

4.50  dz.  pr. 

4-50 

4.00 

4.25 

4.00 

4.25 

4-50 

4-25 

4-30 

4.40 

.Steelvards 

8.50  doz. 

8.50 

8.25 

8.40 

8-35 

8.40 

8.25 

8-45 

S.30 

8-35 

Try  Squares,  8  in 

4-75  doz. 

4-75 

4-30 

4.50 

4.25 

4-75 

4.50 

4-75 

4.25 

4.50 

Universal  Clothes  Wringers    . 

5.50  each 

5-75 

5.00 

5-50 

5.40 

5-65 

S-50 

5-75 

5.50 

5-75 

Wrought  Wrenches  .... 

14.75  doz. 

14^75 

13-50 

13-75 

13-50 

13-25 

14.00 

14.25 

14.50 

14.00 

Washers,  1  in 

.o7i  lb. 

•07^ 

.06J 

.07 

.06  J 

.07 

,07 

•071 

.07 

.07! 

148 


MODERN   ILLUSTRATIVE   BOOKKEEPING 


SIX-COLUMN    BALANCE    SHEET 

The  form  of  balance  sheet  given  below  is  in  use  to  some  extent.  It  includes  in  one  state- 
ment the  trial  balance,  losses  and  gains,  resources  and  liabilities,  and  proprietor's  account. 

In  making  out  this  balance  sheet,  first  enter  the  names  of  the  proprietors'  or  partners' 
accounts,  and  of  all  the  business  accounts,  extending  the  total  debits  and  credits  into 
the  trial  balance  columns.  Enter  the  inventories  in  connection  with  their  respective 
accounts,  in  red  ink,  as  shown  by  Italic  type  in  the  following  form.  Enter  the  balance  of 
cash.  Add  all  personal  accounts  and  enter  as  Accounts  Receivable.  Do  likewise  with 
personal  accounts  having  credit  balances  and  enter  as  Accounts  Payable.  Add  the  trial 
balance  columns  to  see  that  they  balance. 

•Next  extend  the  results  of  the  various  accounts  into  their  proper  columns.  All  accounts 
showing  a  loss  or  a  gain  should  be  extended  into  the  losses  and  gains  columns  for  the  proper 
amount  of  loss  or  gain.  Extend  all  resources  and  liabilities  (except  proprietor's  account) 
into  the  resources  and  liabilities  columns.     Find  the  total  results  by  adding  all  columns. 

It  will  be  noted  that  all  accounts  have  now  been  condensed  into  three  accounts,  namely, 
Proprietor's,  Loss  &  Gain,  and  Resource  &  Liability.  Close  the  Loss  and  Gain  account 
by  finding  the  difference  between  the  debit  and  credit  sides  and  placing  it  on  the  smaller 
side  in  red  ink  with  the  wording,  Net  Loss  or  Net  Gain.  This  difference  will  represent 
either  the  net  loss  or  net  gain  of  the  business.  To  the  net  vTedit  of  the  proprietor's 
account  add  the  net  gain  or  from  it  deduct  the  net  loss,  and  the  result  will  be  the  present 
worth.  Extend  the  amount  into  the  liabilities  column,  which  will  put  the  two  columns  in 
balance.  In  a  partnership  determine  each  partner's  interest  separately,  and  extend  to  the 
liabilities  column,  as  shown  in  the  form  below. 


Balance  Sheet  of  Jonas.  Smythe  &  Browne,  Dec.  31,   1909 


John  Jonas,  part.    . 
Henry  Smythe,  part.     . 
Frank  Browne,  part.     . 
Mdse.  Inv.  4^96.14    .     . 
Expense  /nv.  /3/J0 
Collection       .... 

Mdse.  Disct 

Real  Estate,  fnv.  23^0.00 

Cash 

Accts.  Kcc 

Accts.  Pav 


Net  gain 


John  Jonas'  Inv. 
"  ■•       withdrew 

Yi  net  gain 
Henrv  Smvthe's  Inv.    . 


Frank  Browne's  Inv.     .     . 
"  "         Yi  net  gain 


Trial  Balance 


7326  I  82 
5  28  92 


23 

176 

2250 

2458 

1478 


14442 


97 


3000 
200 


3000 
2500 
2500 
4678 


243 
220 


1300 


90 


76 


31 


14442 


97 


Losses  and  Gains 


407 
23 


430 
tgo4 


233s 


75 


1948 


66  93 
320 


2335 


233s 


75 


75 


Resources  and  Liabilities 


4596 
121 


2350 
2458 
1478 


11005 


1 1005 


«9 


•9 


1300 
1300 


31 
3t 


3434  96 

3'34  96 

3134! 96 
1 1005  19 


ADVANCED  COURSE 


TO    THE   STUDENT 

The  Advanced  Course  is  designed  to  show  the  application  of  the  principles  of  bookkeep- 
ing to  the  records  of  special  lines  of  business  ;  the  development  of  the  simple  forms  of 
books  into  special  forms ;  and  the  classification  and  subdivision  of  accounts. 

The  lines  of  business  selected  are  rej^resentative  of  four  important  departments  of  busi- 
ness activity  —  retailing,  commission,  wholesaling,  and  manufacturing.  In  connection  with 
each,  approved  forms  of  records  are  shown,  and  modern  methods  of  business  procedure  are 
explained  and  illustrated. 

Terminology.  — The  technical  terms  used  in  the  Introductory  Course  are  those  commonly 
employed  by  bookkeepers.  They  are  used  where  the  business  is  of  small  or  ordinary  size 
and  is  conducted  either  by  an  individual  or  a  firm. 

The  rapid  growth  during  recent  years  of  the  corporate  and  trust  forms  of  business 
organization,  and  the  development  of  the  forms  of  business  records  in  connection  with 
them,  have  resulted  in  a  wider  classification  of  the  accounts,  and  a  somewhat  different 
terminology  than  was  necessary  in  the  older  forms. 

Following  are  some  of  the  accounting  terms  generally  used,  and  their  equivalent  book- 
keeping terms,  distinguished  by  A  for  accounting  and  B  for  bookkeeping : 

A  —  Frame  an  entry:  B  —  Make  an  entry.  A  —  Construct  an  account,  raise  an  ac- 
count, set  up  an  account:  B  —  Open  an  account.  A  -  Rule  off  an  account:  B  —  Rule  an 
account.  A — Close  up  an  account :  B  —  Close  an  account.  A  —  Assets:  B  —  Resources. 
A  —  Profits:  B  —  Gains.  A  —  Trading  Account  and  Profit  and  Los.s  Statement :  B  —  Busi- 
ness Statement,  Statement  of  Losses  and  Gains.  A  —  Balance  Sheet,  Statement  of  Assets 
and  Liabilities:  B  —  Financial  Statement,  Statement  of  Resources  and  Liabilities. 

Bookkeeping  and  Accounting.  — The  records  of  the  older  and  newer  forms  of  business 
organization  are  distinguished  by  the  terms  Bookkeeping  and  Accounting.  Accounting 
includes  Bookkeeping,  as  the  term  is  generally  understood,  and  covers  the  whole  field  of 
account  keeping;  while  Bookkeeping  is  restricted  to  a  particular  part  of  the  field,  namely, 
the  records  of  the  transactions. 

Accounting  deals  chiefly  with  the  scientific  arrangement  of  the  forms  of  the  record 
mediums,  such  as  the  books,  etc.,  the  classification  of  the  accounts,  so  as  to  cause  them  to 
show  in  detail  the  results  and  condition  of  the  business,  and  with  the  statements  of  these 
results  and  condition.  Bookkeeping  deals  chiefly  with  the  making  of  the  records,  accord- 
ing to  the  classification  of  the  accounts,  and  the  arrangement  of  the  forms  of  the  record 
mediums,  suggested  by  the  principles  of  accounting.  A  person  who  makes  the  records  of 
business  transactions  is  called  a  '•  bookkeeper."  One  who  performs  the  work  of  classify- 
ing accounts,  arranging  the  forms  of  record  mediums,  supervising  the  records,  and  making 
statements  of  the  results  and  condition  of  a  business  is  called  an  "accountant."  A  person 
who  examines  the  records  for  the  purj^ose  of  verifving  their  accuracy  is  called  an  "auditor." 

In  the  Advanced  Course  both  bookkeeping  and  accounting  terms  will  be  used,  and  the 
student  will  perform  the  duties  of  bookkeeper,  accountant,  and  auditor. 


Cl-t*  150  (COMrLETE) 


RETAIL    GROCERY    BUSINESS 

The  following  transactions  are  designed  to  illustrate  a  system  of  bookkeeping  for  a 
modern  retail  grocery  business,  at  first  by  single-entry,  after  which  will  be  shown  the  method 
of  changing  from  single-entry  to  double-entry,  continuing  the  business  by  double-entry,  and 
incidentally  showing  the  use  of  the  card  ledger  system  of  bookkeeping. 

Single-entry  books  differ  from  those  used  in  double-entry  bookkeeping  chiefly  in  the  fact 
that  a  single-entry  ledger  contains  only  accounts  with  persons,  all  property  and  loss  and 
gain  accounts  being  omitted. 

The  ]3rinciple  of  equal  debits  and  credits,  belonging  to  d  juble-entry,  is  not  a  part  of 
single-entry  bookkeeping,  and  consequently  no  equality  exists  between  the  debit  and  credit 
sides  of  the  ledger,  and  no  trial  balance  can  be  taken  of  a  single-entry  ledger. 

An  account  with  cash  should  be  kept  in  the  cash  book,  as  in  double-entry  bookkeeping, 
and  by  means  of  a  bill  book  it  is  easy  to  keep  a  record  of  notes  receivable  and  notes  payable. 
A  record  of  merchandise  may  be  kept  by  the  use  of  an  invoice  book,  or  purchase  book,  and 
a  sales  book. 

In  a  well-arranged  set  of  single-entry  books  it  is  possible  to  show  as  complete  a  record 
of  the  business  as  in  a  set  of  books  kept  by  double-entry  ;  but  it  will  not  be  in  so  compact 
a  form,  and  will  require  more  work  on  the  part  of  the  bookkeeper. 

Proof  of  Posting. — While  no  trial  balance  can  be  taken  of  a  single-entry  ledger,  the 
correctness  of  the  posting  can  be  determined  with  the  same  degree  of  accuracy  as  in  a 
double-entry  ledger,  by  proving  the  posting.  This  is  done  by  finding  first,  the  total  of  the 
charge  postings  in  the  ledger  for  the  month,  and  the  total  of  the  charge  entries  in  the  books 
of  original  entry,  and  comparing  the  two  amounts  ;  second,  by  finding  the  total  of  the  credit 
postings,  and  the  total  of  the  credit  entries  in  the  books  of  original  entry,  and  comparing 
the  two  amounts.     This  is  called  a  proof  of  posting. 

Books  Used.  —  In  order  that  a  complete  record  of  the  following  business  may  be  obtained 
by  single-entrv,  the  books  used  will  be  as  follows:  journal,  cash  book,  abstract  sales  book, 
purchase  book,  bill  book,  general  ledger,  and  card  ledger,  using  the  card  ledger  only  for 
customers'  accounts.  A  simpler,  but  less  effective,  set  of  single-entry  books  would  consist 
of  journal,  cash  book,  and  ledger. 

Journal.  —  The  journal  contains  such  debits  and  credits  to  personal  accounts  as  are  not 
entered  in  the  cash  book  and  on  the  sales  sheets,  from  which  the  abstract  sales  book  is 
made  up.  The  abbreviation  Dr.  or  Cr.  is  written  after  the  title  of  the  account,  in  each 
entry,  and  the  explanation  underneath.     The  form  on  page  152  illustrates  the  journal. 

Sales  Slips.  —  In  most  modern  grocery  stores  sales  slips  are  used,  and  when  sales  of 
merchandise  on  account  are  made,  the  slips  are  written  in  duplicate  by  means  of  carbon 
paper  by  the  salesman  as  he  takes  the  order,  verbally  or  from  an  order  book.  The  form  on 
page  153  illustrates  the  sales  slip. 

The  original  and  duplicate  sales  slips  are  sent  to  the  office  to  have  the  prices  O.K.'d. 
The  original  is  retained  by  the  bookkeeper,  and  the  duplicate  is  sent  with  the  goods  when 

lol 


152 


modern  illustrative  bookkeeping 
Journal 


'f 


.1^ 


t-/. 


x7  ^^_   '•    ,<y 


-  i<:-<'^^ 


c 


z 


■  <sZ^2Z-«/^_ 


-/ 


-4/, 


o^^=^^ 


vS-<rr 


^^Ty— 


-/-^■t  :    , 


^SiPC 


2  0^ 


6  i? 


Jf^c? 


'2 
/ 


/  ^-J 


/J'l? 


RETAIL   (;RUCKRV    BUSINESS 


153 


2  Z 


delivered,  so  that  the  customer  re- 
ceives a  complete  bill  with  each  lot 
of  goods  purchased,  and  there  is  little 
chance  for  mistakes,  or  foy  a  dispute, 
when  the  weekly  or  monthly  state- 
ment is  rendered.  The  bookkeeper 
enters  the  amount  of  each  sales  slip 
upon  his  abstract  sales  sheet  for  the 
day. 

Abstract  Sales  Sheet.  —  The  form 
on  page  154  illustrates  a  daily  ab- 
stract sales  sheet,  in  which  the  names 
of  the  customers  and  the  amounts 
of  the  sales  on  account  are  given,  to- 
gether with  the  cash  sales  for  the 
day,  and  total  daily  sales. 

Many  bookkeepers  keep  an  abstract  sales 
book  in  the  form  shown  on  page  155,  and 
post  directly  from  this  book  to  the  custom- 
er's account  in  the  ledger.  A  better  method 
is  to  enter  the  amount  of  each  sale  on  ac- 
count in  the  abstract  sales  sheet  for  the  day, 
and  carry  only  the  total  of  the  day's  sales  to 
the  abstract  sales  book  at  the  close  of  each 
day ;  and  to  post  daily  the  items  from  the  • 
sales  slip  to  the  customer's  monthly  state- 
ment sheet,  and  carry  only  the  total  of  this 
monthly  sheet  to  the  debit  of  the  customer, 
at  the  end  of  the  week  or  month,  on  his 
ledger  card,  or  page,  in  case  a  book  is  used 
instead  of  cards.  This  method  is  preferable, 
as  these  sales  slips  are  original  entries,  and  it 
is  to  them  that  reference  must  be  made  if 
anv  discrepancy  exists  between  an  account 
rendered  and  the  record  kept  by  a  customer. 
The  bookkeeper  should  post  these  sales  slips 


^f 


PS 


J 


j-t; 


Sales  Slip 


THOS.  E.  SEARS 

Rochester,  N.   Y.  ( -^C^    V^  ii 


9 

to 

<l 
12 
13 
<4 
>5 

»7 
18 


jL. 


-^^ 


y^y^  ukv^^ 


d^^ 


o'>'--r- 


2,jL. 


7f 


PLEASE  RETURN  THIS  BILL  IN  CASE  OF  ERROR, 


H*au«*cruttCB  uooia  r*T(iii 


l.">4 


MODERN   ILLUSTRATIVE   BOOKKEEPING 


»o.^^<5' 


Al'.sriv'AC'l^  SALLCS  SHEET, 


V3^-^^^.^ 


^Zf 


/  z 

z. 
/ 
J 
z 


Z  '/J\ 


^^i 


dnily  to  the  monthly  statement  sheets,  and  when  the  posting  is  completed,  should  file  away  the  sales  slii's  al- 
phabetically, or  each  day"s  slips  in  a  separate  package,  so  that  they  may  be  Teadily  accessible,  should  thcv 
be  required  to  verify  a  customer's  monthly  statement  after  it  has  been  rendered. 

Cash  Sales.  —  For  sales  of  merchandise  for  cash,  a  sales  slip  is  used  similar  in  form  to 
that  used  for  sales  on  account,  as  shown  on  page  153,  except  that  it  is  receipted  when  the 
goods  are  delivered ;  or.  if  tiie  sale  is  made  in  the  store,  the  customer  is  given  a  cash  ticket, 
which  is  presented  with  the  mone\'  to  the  cashier,  who  files  the  ticket  with  the  cash  sales 
slips  on  a  spindle,  or  in  some  other  manner.  The  sum  of  the  amounts  of  these  tickets  and 
of  the  cash  sales  slips  represents  the  sum  of  the  cash  sales  of  the  day,  and  should  be  carried 
to  the  Sales  for  Cash  colimin  of  the  abstract  sales  book,  and  also  to  the  debit  side  of  the 
cash  book.  (See  form  of  abstract  sales  book,  page  155,  and  form  of  cash  book,  pages 
156  and  157.)  The  sum  should  also  be  entered  at  the  end  of  the  abstract  sales  sheet  for 
the  day,  as  shown  above. 

In  retail  stores  where  a  cash  or  partly  cash  business  is  done,  the  cash  register  is  now  quite  generally  used. 
Tliis  is  a  combination  cash  drawer  and  record  macliine,  and  is  desijined.  among  other  thinjjs.  to  prevent  mistakes 
and  fraud  in  handling  the  casli.  The  cash  register  records  the  amount  of  tlie  purch.ase  on  a  strip  within  the 
machine,  and  at  the  same  time  indicates  this  amount  on  the  outside  where  it  can  be  easily  seen  by  the  customer. 
The  cash  in  the  register  at  any  time  should,  of  course,  agree  with  the  record  on  the  strip.  Some  cash  registers 
have  special  arrangements  for  recording  and  exhibiting  the  various  sources  from  which  tlie  cash  is  received,  and 
for  other  information,  as  "Cash  Sales,"  "Cash  Rec'd  on  Acct.,"  "Charge  Sales."'  etc.  .A.  c.ish  register  of  this 
kind  is  generally  used  in  connection  with  a  suitably  adapted  charge  and  credit  .system  for  customers"  accounts. 

Abstract  Sales  Book.  —  The  abstract  sales  book  contains  colimms  for  date,  number  of  daily 
abstract  sales  sheet,  sales  on  account,  cash  sales,  total  daily  sales,  total  weekly  sales,  and 
total  monthly  sales,  so  that  the  book  will  show  at  a  glance  each  day's  business,  both  cash 
and  credit,  the  sum  total,  and  the  total  sales  at  the  end  of  each  week  and  month. 


RE'IAIL   GROCERY    BUSINESS 

Abstract  Sales  Book. 


155 


'^  - 

Dati 

From  Sales  Sheet  No 

Salks  om  Account 

Sales  for  Cash. 

Total  Dailv. 

Total  Weeklv. 

Total  Monthly. 

Oo^. 

/ 

V^ 

V-f 

Z^ 

dJ  yz 

/// 

f^ 

z 

^7/ 

y  ^  z 

ze 

7^ 

^^ 

^  ^^ 

£j 

- 

J 

zyr 

7f 

f<i 

6'^ 

e/u 

/  4^^  j/(P 

■^ 

2/f 

^ 

zz 

7^ 

z  ^ 

/  /  / 

4ii 

^ 

ZJ^ff 

C2 

A^Z 

'^r  xf 

/   /  i7 

7' 

C 

zr  / 

/  /   A^J3 

/^f^ 

^fj 

J  / 

rfz 

Vf 

It  is  evident  that  the  sum  of  the  footings  of  the  Sales  for  Cash  and  Sales  on  Account  col- 
umns of  the  abstract  sales  book  will  at  any  time  show  the  total  sales  of  merchandise  to  date. 
The  above  form  illustrates  the  abstract  sales  book. 

In  the  series  of  transactions  following,  the  daily  alistract  sales  sheet  will  be  used  according  to  the  form 
shown  on  page  154,  and  the  abstract  sales  book  will  contain  only  totals,  as  shown  in  the  above  form. 

PURCHASE   BOOK. 


T>Ktx  or  Imtdicc      L.P, 


NAME  AND 


WHEN  DUE, 


WHEN  PAID. 


Nvoici         DiseouHi 


^^ 


/ 
z 

.s 

/ 

7 

/  ff 

/J 

//• 

ze 

ZJ 

ZJ 

zr 


\/ 


3-="?/ 


Gi{-&/r::&.d.€L^P^c^^^^i>.^^7i^^'       ■^.■ 


t^f^'Z^-e^-i^^ 


--=^j4    y/: 


yf^/- 


7. 


777e7.^^£y..-.;7!-'e.i--i-i>^i.-e!^Z 


_  'c^  A 


s7 


A. 


'^/n^^ 


Om 


2y 


'/ 


/ 


zrf'Z/! 

/AzJ\\ 

vzz 


ZJ     ZSJTff 


rzz 


7^ 


'/J 


^j 


/  Z'. 


^<i^ 


'^7 
zr^ 
¥^z 


>'Zjfiti 


/-i^iZz 


4ZiiL 


•J 


W  y^^'- 


rA-. 


^7 


'/i 


Z/J  ftf 

'Zzzrs 


/2¥ 

zVf 


^7 


J'/Z 
3  /^lif 


Co 

'/iZ 


r^ 


Purchase  Book.  — The  purchase  book  is  an  abstract  of  the  invoices  of  merchandise  pur- 
chased in  the  rei;ular  course  of  business.  Where  the  ordinary  invoice  book  is  kept,  it  would 
be  unnecessary  to  keep  the  purchase  book,  since  all  the  records  of  the  nurchase  book  and 


156 


MODKKN    ILLUSTRATIVE   BOOKKEEPIXG 


Z^ 


.^ 


^^^ 


O^ 


^c^ 


.^^ 


^ 


^^ 


^.  /. 


.-^■^p-i^ 


6U 


.j- 


/ 


iZ-^^.^-^^^-'f'...^ 


-r^U-^ 


^j^^-T*^^ 


-2 


'-<^-^i*'-Z?-^'t>-fZ^-^3!^f-^ 


•t^^^ 


-T<^ 


4^ 


'^<:^/. 


^3 
2J 


7^k 


^r\j.f 


f^jy. 


'7^J 


JZ/  J/ 


Z2. 


also  the  items  of  these  purchases  would  be  found  in  the  invoice  book.  Many  bookkeepers, 
however,  keep  a  purchase  book,  and  file  the  invoices  loose,  instead  of  pasting;  them  into  a 
book.  In  this  series  of  transactions,  no  invoices  are  received  by  the  student,  but  an  abstract 
of  invoices  is  kept  in  the  purchase  book,  which  contains  columns  for  the  date  of  the  invoice, 
the  ledger  folio,  the  name  of  the  person  or  firm  from  whom  the  goods  were  bought,  the 
terms  of  payment,  the  due  date,  the  date  of  payment,  the  amount  of  the  invoice,  the  dis- 
count, and  the  amount  paid.     The  form  on  page  155  illustrates  the  purchase  book. 

It  is  evident  that  the  footing  of  the  .Amount  of  Invoice  column  in  the  purchase  book 
will,  at  any  time,  show  the  amount  of  merchandise  purchased,  and  tliis  amount,  less  the 
footing  of  the  Discount  column,  will  be  the  net  cost  of  merchandise  at  any  date.  The  total 
footing  of  the  columns  of  the  abstract  sales  book  will  show  the  amount  of  merchandise  sold 
at  any  time.  To  this  amount  add  the  inventory  of  merchandise  unsold,  and  the  difference 
between  this  sum  and  the  net  cost  of  merchandise  will  show  the  gain  or  loss  on  trading. 

Cash  Book.  -  The  cash  book  does  not  differ  materially  from  the  cash  book  kejit  in  double- 
entry.      The  left-hand  page  contains  a  record  of  all  cash  received,  and  the  right-hand  page 


RETAIL   GROCERY    liUSIXESS 


~~^^ 


Q^ 


~y\^^^^'g/^^i.-i.^>^^--fi^--?',.---7^  z-'tf-^-Z-CA^  i^  CJ^c-^. 


— :#C-^t-^-<?Z.^  2^^^^ 


60 

/  ^ 
/ 


2^ 
2^' 


s  yd 


6 


2J- 


£Z^.-<d-^^^>C-^^ 


'~y^U^^-;^^^t>-if-^ 


I  ^ 


•£.<fl;^2>2«-2:--5 '' 


7^' 
¥7- 


Z  ^^^^i'-^-z-^ . 


•:>x^-z:i^>^-L^c'-A-(P-;^  i-tmr-!^ 


i^.C^;^3^. 


^iZ^-C-i>^. 


Z-'Z 

s 

Zip 


?z 


CT  O^l^L't/^ 


a^.- 


/  v'VZ    2 


zy^J  fJ- 


^'C-i'-z^—^^-'iz-'fZ'iffr* 


6zz 
,fz/_ 


4^/ 


^VJZZ 


a  record  of  all  cash  paid  out;  also  a  special  column  for  merchandise  discount  allowed  on 
bills  paid  within  the  specified  date.  When  such  accounts  are  posted,  two  debit  entries 
should  be  made  on  the  personal  account  affected,  one  for  the  merchandise  discount,  and 
one  for  the  net  amount  paid,  thus  canceling  the  amount  of  the  invoice.  It  is  not  necessary 
in  a  single-entry  cash  book  to  write  the  name  of  the  account  affected  by  the  transaction, 
e.xcept  when  it  is  a  personal  account,  as  only  accounts  with  persons  are  kept  in  the  ledger, 
and  only  those  entries  in  the  cash  book  which  affect  personal  accounts  will  be  posted  to 
the  ledger. 

The  form  on  pages  156  and  157  illustrates  the  cash  book. 

Customers'  Statements.  —  In  most  grocery  establishments  where  modern  methods  are  in 
use,  the  items  from  the  sales  slips  are  not  posted  to  the  ledger  account  of  the  customer, 
but  instead  are  posted  directly  from  the  sales  slips  to  a  monthly  statement  sheet,  which  at 
the  end  of  the  month  is  handed,  or  mailed,  to  the  customer,  and  the  total  only  of  this  sheet 
is  posted  to  his  account  in  the  ledger.  When  a  statement  sheet  is  handed  in  with  cash  to 
make  payment  of  the  account,  the  sheet  is  receipted  and  returned  to  the  customer,  who  re- 

♦  All  balance  entries  and  rulings,  of  course,  are  to  be  in  red  ink. 


1.".8 


MODi:UN    Il.lXSTRATlVl-:   liOOKKKKI'ING 


ccivcs  credit  in  the  ledger  for  the 
amount  of  his  pa}iiient  in  the  rcj;u- 
lar  posting  from  the  cash  book,  where 
the  payment  should  be  entered  when 
made.  The  postings  to  the  state- 
ment sheets  should  be  made  at  the 
end  of  each  day  before  the  sales  slips 
of  that  day  are  filed  away  for  refer- 
ence. The  accompanying  form  illus- 
trates a  customer's  statement  sheet. 

A  shorter  method  would  consist  in  post- 
ing to  tlie  customer's  statement  sheet  only 
the  totals  of  the  sales  slips,  not  repeating  the 
items  on  the  statement  sheet.  This  would 
save  a  large  amount  of  work  to  the  book- 
keeper, and  if  the  customer  keeps  his  sales 
slips  delivered  with  each  order,  he  can  readily 
compare  his  statement  sheet  with  his  sales 
slips :  but  in  practice  it  is  found  that  custom- 
ers do  not  inv.ariably  keep  these  sales  slips, 
and  there  are  more  likely  to  be  disputes  about 
the  amount  of  the  monthly  statement  than 
when  the  items  are  repeated  on  the  stateinent 
sheet  as  here  illustrated. 

Many  small  retailers  keep  only  two 
books  —  cash  book  and  ledger  —  in  connec- 
tion with  the  sales  slip  and  statement  system. 
They  keep  the  original  sales  slips  in  alpha- 
betical order  in  a  cabinet,  which  contains 
wire  racks  or  clips,  and  the  statements  in  an 
account  file,  as  explained  below. 

Ledger  Account  File.  —  Each  day 
after  the  customers'  statement  sheets 
are  jiosted,  they  should  be  placed  in 
an  indexed  file  where  they  are  read- 
ily accessible,  and  from  whicii  they 

Lt:iK;KK  Account  Fii.k 


MONTHLY  STATEMEST. 

Thos.  E.  Sears, 

GROCER, 

Liberty  Building,  Main  Si.  East. 

14,  IS  and  20  Lake  Avenue, 

Plymouth  Avenue,  cor.  Spring  Si. 

Rochester,  N.  K.,    Jf.^<-^^  /     >o 


Sold  to 


C-o^. 


C^-a.-rZ-.d.^ 


^^ 


JJ 


y 


30 

23 
3e 


3  A 


'C:iSZie>-C<^' 


/<£■ 


*^e 


should  be  removed  as  soon  as  the  month's  work  is 
posted,  and  handed,  or  mailed,  to  the  customer. 
An  excellent  form  of  file  is  the  ledger  account  file 
shown  in  the  accompanying  illustration,  which  can 
be  init  ill  the  safe  at  night,  the  same  as  an  ordi- 
nary  ledger. 

Loose  Leaf  and  Card  Ledger  Systems.  —  The 
system  of  bookkeeping  b\'  means  of  loose  sheets 
and  cards,  properly  indexed,  in  place  of  books,  has 
grown  rapidly  in  favor  during  the  past  few  years  ; 
especially  is  this  true  in  business  houses  where 


RETAII,   GROCERY   BUSINESS 


I.IO 


there  are  numerous  departments,  and  where  a  large  number  of  books  would  be  necessary  in 
order  to  keep  a  complete  record.  The  records  of  the  day  are  made  on  loose  sheets,  and  these 
sheets  are  handed  to  the  head  bookkeeper,  who  places  them  in  properly  arranged  files,  so 
that  the  record  of  each  day's  business  in  every  department  is  readily  accessible.  Out  of  this 
system  of  account  keeping  has  grown  what  is  known  as  the  card  ledgir,  a  method  of  keeping- 
ledger  accounts  on  cards  which  possesses  many  advantages,  among  which  are  the  followin"-: 

First,  the  ledger  kept  by  this  system  contains  no  accounts  with  persons  who  have  ceased 
to  do  business  with  the  firm,  for  as  soon  as  a  customer  closes  his  account,  either  by  remov- 
ing from  the  place,  or  by  transferring  his  custom  to  some  other  business  house,  his  card  is 
taken  from  the  receptacle  containing  the  ledger  cards  and  placed  in  a  file  kept  for  accounts 
which  have  been  closed.  Should  the  customer  return,  the  card  may  be  taken  from  this  file 
and  replaced  in  the  ledger  receptacle.  In  taking  a  trial  balance,  or  an  abstract  of  his  cus- 
tomers' ledger,  therefore,  the  bookkeeper  has  only  live  accounts  to  deal  with,  and  there  is 
less  liability  to  make  mistakes. 

Second,  the  cards  are  easily  handled,  and  once  the  cabinet  has  been  purchased,  the  ledger 
can  be  extended  at  a  small  expense,  the  cards  costing  little  more  than  ordinary  writing  pa[)er. 
In  case  statements  are  desired  promptly,  a  ledger  of  a  thousand  customers'  accounts  could  be 
worked  upon  at  the  same  time  by  the  entire  office  force,  while  with  a  book  ledger  but  one  per- 
son can  work  on  statements  at  a  time.  In  case  of  disputes  regarding  accounts,  where  it  is 
necessary  to  produce  the  books  in  court,  the  ledger  card  or  loose  sheet  containing  the  account 
in  dispute  can  be  produced  without  interfering  with  the  work  of  the  accountants  at  the  office. 

.\n  objection  sometimes  urged  against  the  card  system  is  that  it  is  difficult  in  posting  to 
find  the  individual  cards,  and  the  cards  are  liable  to  get  misplaced  ;  but  if  properly  indexed, 
and  carefully  placed,  there  is  no  difficulty 
from  this  source.  The  cards  can  be  found 
as  readily  and  as  surely  as  the  pages  of  cus- 
tomers' accounts  in  an  ordinary  ledger. 

The  accompanying  cut  illustrates  the  form 
of  a  card  ledger  indexed  numerically.  If  the 
number  of  customers  is  not  too  large,  the 
alphabetic  arrangement  is  preferable,  as  it 
requires  no  other  index.  If  the  business  is 
very  extensive,  however,  it  is  better  to  num- 
ber each  customer  and  divide  the  ledger  into 
hundreds,  then  subdivide  the  hundreds  into 
tens.  A  small  tab  at  the  top  of  each  card  is 
provided  for  a  number,  and  an  index  book 
or  a  card  index  is  kept  for  the  names  corre- 
sponding to  the  niunbers. 

The  card  itself  does  not  differ  in  ruling 
from  the  ordinary  ledger  page.  In  posting  to 
the  ledger  card,  first  enter  in  the  explanation  column  the  dates  of  the  sales  slips  which  make 
up  the  customer's  statement  sheet,  then  enter  the  total  of  the  statement  in  the  debit  money 
column.  It  may  require  two  or  three  lines  of  the  explanation  space  to  write  the  dates  of  the 
sales  slips,  but  these  dates  will  .save  a  great  amount  of  labor  in  looking  up  sales  slips  from 
the  daily  files  in  case  of  a  disagreement  between  a  customer's  account  as  kept  by  him  and  as 
kept  by  the  bookkeeper.     The  following  cut  illustrates  a  form  of  ledger  card. 


Form  of  Card  Ledger 


160 


MODERN    ILLUSTRATIVE   BOOKKEEPING 


FoKM  OF  Ledger  Card 


a^iC 


Residence    ^ 


'  2.(-2.7-2.f/'i3  C 


^ 


v<^-^rvif-/if- jg 


^-■^-2rr-;Lr-Ja-J 


1^^^^^ 


^JL.2^^ 


/'2 


PRELIMINARY    WORK 
October  i,  19 — 

You  have  this  day  purchased  of  Adams  &  Hackland  their  entire  stock  of  groceries, 
in  the  store  situated  at  #222  Division  St.,  and  invoiced  at  S  2993.33,  for  75  %  of  the  invoiced 
value,  for  which  you  have  paid  cash.  The  net  vahie  of  this  stock  of  merchandise  repre- 
sents your  merchandise  investment;  you  also  invest  S  300  in  cash. 

You  have  agreed  to  collect  the  accounts  due  Adams  &  Hackland  and  allow  them  95  % 
of  their  face  value,  and  become  responsible  yourself  for  any  losses  which  may  arise  from 
bad  debts. 

The  following  customers  of  Adams  &  Hackland  owe  the  amounts  opposite  their  names. 


.Mrs.  S.  T.  Worthcn, 

26  Laurel  St., 

^23.45 

A.  B.  Ryder, 

61  Spring  St., 

44.28 

C.  H.  Stratton,  Elm  House, 

Central  Square, 

212.40 

Mrs.  Wm.  Hanson, 

28  Summer  St., 

31.42 

Wm.  Harper, 

62  East  St., 

38-49 

Edward  Austin, 

31  Green  St., 

28.74 

Mrs.  F.  Gilford, 

44  lirown  St.,       ,. 

21-39 

E.  L.  Corey, 

54  Brown  St., 

18.96 

Mrs.  A.  Waldron, 

82  Chestnut  St., 

3948 

P.  J.  McGuire,  Cottage  Hotel 

52  Ann  St., 

169.34 
S627.95 

\'ow  have  agreed  to  pay  Adams  &  Hackland  the  amount  of  95  %  of  these  bills  within 
three  months  after  Oct.  i.  You  have  also  agreed  to  continue  the  lease  of  the  store  #222 
Division  St.  until  Jan.  i,  at  the  present  rental  of  S  50  per  month,  and  to  retain  the  store  clerks, 
Thos.  Stuart  and  Eugene  Canfield,  at  a  salary  of  S12  per  week  each,  and  J.  M.  Marsh  as 
delivery  clerk  at  $  20  per  week,  he  furnishing  a  horse  and  delivery  wagon. 

Make  an  entry  in  the  journal,  giving  yourself  credit  for  the  net  value  of  the  merchan- 
dise ;  in  the  cash  book  credit  yourself  with  $  300  invested.  In  the  journal  credit  Adams  & 
Hackland  with  95  %  of  the  value  of  accounts  purchased  of  them  ;  also  enter  a  memorandum 
of  the  clerks  and  rental  agreements.     (See  model  journal,  page  152.) 


RETAIL   GROCKKV    BUSINESS  161 

In  this  series  of  transactions  the  card  ledger  is  used,  as  explained  and  ilhistrated  on 
pages  159,  160. 

Take  from  your  package  of  business  forms  the  blank  cards  for  your  customers'  card 
ledger,  and  enter  on  the  debit  side,  after  the  name  and  address  of  each  person  have  been 
written,  the  amount  due,  under  date  of  Oct.  i,  writing  Ba/aiicc  \n  the  explanation  column. 
Use  the  alphabetic  arrangement  for  your  card  ledger,  and  keep  the  ledger  cards  in  the 
original  envelope,  in  front  of  the  blank  cards. 

TRANSACTIONS 

October  i,  19 — 

Bought  of  Hackett  Bros.,  City,  on  account,  60  ds.,  2  %  10  ds.,  10  brls.  N.  S.  flour  at 
$5  ;    10  brls.  Redcloud  at  $4.50;   5  brls.  pastry  at  $5.50. 

Enter  your  purchases  in  the  purchase  book.     (See  model,  page  155.) 

Bought  of  E.  J.  Dunn  Grocery  Co.,  City,  4  mos.,  5  %  10  ds.,  2  hf.  chts.  Young  Hyson 
tea,  140  lbs.,  at  32^;  2  hf.  chts.  Oolong,  100  lbs.,  at  47  ^ ;  2  hf.  chts.  Eng.  Breakfast,  120 
lbs.,  at  30^;  2  bags  Rio  coffee,  250  lbs.,  at  10^;  I  bale  Mocha,  150  lbs.,  at  22^;  2  mats 
Java,  150  lbs.,  at  21  ^. 

Bought  of  the  American  Sugar  Refining  Co.,  New  York,  on  account,  30  ds.,  i  %  10  ds., 
i  brls.,  1565  lbs.,  G.  sugar  at  sJj*;  2  brls.,  622  lbs.,  C.  sugar  at  5^. 

Purchased,  for  cash,  of  Gray  Bros.,  City,  20  bu.  potatoes  at  40^;   5  brls.  apples  at  $  1.50. 

Purchased,  for  cash,  of  Williams  &  Andrews,  City,  60  doz.  fresh  eggs  at  20^;  120  doz. 
case  eggs  at  15^. 

The  following  ten  sales  slips  have  been  handed  in  by  the  salesmen. 

No.  1. —  Mrs.  S.  T.  Worthen,  #26  Laurel  St.,  3  lbs.  butter  at  25/;  12  eggs,  20^;  i  pk. 
api- les,  20^;   I  pk.  potatoes,  15^;   i  gal.  K.  oil,  12^;   i  lb.  M.&J.  coffee,  32^. 

Make  out  a  statement  sheet  for  each  person  named  on  the  sales  slips,  and  enter  the  items 
of  each  day's  sales  on  the  statement  sheets,  allowing  a  line  for  each  item.  Keep  your  state- 
ment sheets  in  alphabetic  order  in  your  large  envelope.  In  actual  practice,  the  statement 
sheets  would  be  placed  in  the  ledger  account  file,  and  at  the  end  of  the  day  the  slips  would 
be  p.'aced  in  an  envelope  or  file  and  marked  with  the  current  date,  as,  Oct.  j,  ig — ,  so  that  if 
any  ciispute  arose  regarding  the  sales  slips,  they  could  be  readily  referred  to.  (See  model  of 
statement  sheet,  page  158;  see  illustration  of  ledger  account  file,  page  158.)  No  entry  for 
a  sale  is  made  in  the  books. 

The  grocer  who  keep.s  his  books  in  the  old  stvie  enters  all  his  credit  sales  on  a  blotter,  posts  from  the  blotter 
to  the  ledger,  and  makes  out  his  statements  from  the  ledger  at  the  end  of  the  month.  The  modern  grocer  posts 
the  sales  slips  directly  to  the  customers'  monthly  statement  sheets,  and  at  the  end  of  the  month  the  statements  are 
ready  for  the  customers,  as  the  bookkeeper  should  do  his  posting  at  the  end  of  each  day.  The  footings  only  of 
the  statement  sheets  are  carried  to  the  customers'  ledger. 

No.  2.  — A.  B.  Ryder,  #61  Spring  St.,  i  lb.  E.  B.  tea,  60^;  i  lb.  M.  &  J.  coffee,  32^; 
I  pkg.  gelatine,  15^;  2  lbs.  raisins  at  16^;   10  lbs.  butter  at  23)^;   12  S.  F.  eggs,  24^. 

No.  3. —  C.  H.  Stratton,  Elm  House,  i  tub  butter,  40  lbs.,  at  22 i^;  10  doz.  case  eggs  at 
18^;   2  brls.  apples  at  Si. 75  ;    i  brl.  N.  S.  flour,  $  5.50;  4  sacks  pastry  flour  at  $  1.50. 

No.  4. —  Mrs.  Wm.  Hanson,  #28  Summer  St.,  2  pkgs.  rolled  oats  at  I2.U^  2  jikgs. 
Germea  at  15^;  5  doz.  case  eggs  at  iS^;  6  cans  tomatoes  at  10^;  6  cans  corn  at  \of ;  20 
lbs.  G.  sugar  at  6^ ;   2  lbs.  Rio  coffee  at  20^;  \  lb.  VV.  pepper  at  40^. 

No.  5.  —  Wm.  Harper,  #62  East  St.,  2  lbs.  butter  at  26^;  i  box  boneless  codfish,  45?; 
I  can  tomatoes,  10^;   i  bu.  potatoes,  6oJ^;   i  pk.  apples,  20^;   i  lb.  Y.  H.  tea,  50^. 


1(;2  MODERN   ILLUSTR-VriVE   BOOKKEEPING 

No.  6.  —  Edward  Austin,  #  31  Green  St.,  i  brl.  N.  S.  flour,  S5.50;  2  lbs.  cream  cheese  at 
i6t';    I  lb.  Y.  H.  tea,  50^;    12  S.  F.  eggs,  24}^;   5  gals.  K.  oil  at  i^f^- 

No.  7. —  Mrs.  F.  Gilford,  #44  Brown  St.,  12  S.  F.  eggs,  24/^;  2  lbs.  butter  at  26<^;  i  pk. 
potatoes,  15^;  I  head  cabbage,  6^;  2  bunches  beets  at  5^;  i  pkg.  Germea,  15^;  5  cakes 
Ivory  soap  at  5  ^;  5  lbs.  rice  at  10^;   i  gal.  molasses,  60^. 

No.  8.  —  Kdward  L.  Corey,  #54  Brown  St.,  i  brooni„35>^;  ^  gal.  maple  sirup  at  S1.25; 
I  can  tomatoes,  10^;    i  bu.  potatoes,  60^;    I  brl.  apples,  $2. 

No.  9.  -  Mrs.  A.  VValdron,  #82  Chestnut  St.,  2  lbs.  butter  at  26 f^;  i  lb.  cheese,  16^;  i 
sack  pastry  flour,  Si. 50;  i  pkg.  Germea,  15;^;  12  S.  F.  eggs,  26?;  i  pkg.  H.  O.  pancake, 
10^:    I  qt.  maple  sirup,  35)^. 

No.  10.  V.  J.  McGuire,  Cottage  Hotel,  #  52  Ann  St.,  i  lb.  M.  &  J.  coffee,  32  ^;  i  wash- 
board, 50>';  I  lb.  raisins,  10^;  i  bottle  bluing,  10^;  i  broom,  30?^;  i  pkg.  rolled  oats,  i^f: 
12  oranges,  35  p. 

The  amount  of  cash  sales,  as  shown  by  the  casii  tickets  handed  in  by  the  salesmen  and 
the  customers,  is  $  121.45.  Enter  this  amount  in  the  cash  book,  on  the  debit  side,  with  the 
explanation,  Ciis/t  sales,  as  per  tickets. 

Enter  the  total  of  each  customer's  sales  slip  against  the  customer's  name  on  an  abstract 
sales  sheet,  dated  Oct.  i,  and  numbered  //  also  enter  the  total  cash  sales  underneath,  and 
carry  these  amounts  to  the  j^roper  columns  of  the  abstract  sales  book.  (See  models,  pages 
154  and  155.)     File  the  abstract  sales  sheets  in  numeric  order  in  your  large  envelope. 

Paid  cash  as  follows:  Books  and  stationery,  $6.25;  postage  stamps.  Si;  one  month's 
rent  in  advance,  S50;  merchandise  purchased  of  Gray  Bros.,  Si 5-50;  merchandise  pur- 
chased of  Williams  &  Andrews,  $30.      Enter  in  the  cash  book.     (See  form,  pages   157.) 

Balance  your  cash  book,  entering  the  difference  in  red  ink  on  the  credit  side.  Bring 
down  the  balance  on  the  left-hand,  or  debit,  side,  in  the  second  column,  under  date  of 
Oct.  8.  In  this  series  of  transactions  the  cash  book  will  be  balanced  at  the  close  of  each 
day's  business,  in  accordance  with  the  custom  in  actual  retail  business. 

October  8,   19  — 

Purchased  of  S.  M.  Crockett  &  Co.,  City,  on  account,  30  days,  3  '/c  10  ds.,  5  doz.  tomato 
ketchup  at  S  i-50;   1  gro.  bluing,  S7.50;  3  doz.  brooms  at  S2. 

Purchased  of  Gray  Bros.,  for  cash,  50  heads  cabbage  at  4^;  60  bunches  beets  at  2^. 

Bought,  for  cash,  from  wagons,  20  doz.  S.  F.  eggs  at  20  f  ;  60  lbs.  cream  cheese  at  12^. 

The  following  sales  slips  have  been  handed  in  by  the  salesmen. 

No.  1. — Mrs.  S.  T.  Worthen,  10  lbs.  G.  sugar  at  6\^  ;  i  bottle  bluing,  io>^;  2  lbs.  cheese 
at  165-';   I  lb.  Y.  H.  tea,  50^. 

No.  2.  -  Wni.  Harper,  i  lb.  M.  &  J.  coffee,  32^ ;  i  brl.  N.  S.  flour,  S  575  ;  2  qts.  molasses 
at  12,',  t";   5  cakes  Ivory  soap  at  5^. 

No.  3.  —  A.  B.  Ryder,  10  lbs.  G.  sugar  at  6.]/^;  i  pkg.  R.  oats,  12/;  i  pk.  potatoes,  15^; 
5  gals.  K.  oil  at  13^;   5  lbs.  lard  at  12^. 

No.  4.  —  Mrs.  F.  Gilford,  10  lbs.  G.  sugar  at  6.]^;  i  lb.  M.  &  J.  coffee,  2>2f\  U  lbs. 
cheese  at  16^;   1  sack  flour,  $1.50;   i  can  corn,  10^;   1  can  tomatoes,  \o^ :   i  broom,  35^. 

No.  5.  —  E.  B.  Woods,  #44  Laurel  St.,  2  lbs.  print  butter  at  305^;  i  bu.  potatoes,  60  f  : 
I  pk.  apples,  20^;  12  bananas,  20^;  5  lbs.  G.  sugar  at  6\f^;  i  lamp  chimney,  10^;  i  brl. 
N.  S.  flour,  S  5.75. 

No.  6.  —  Edward  Austin,  10  lbs.  tub  butter  at  24^^;  i  lb.  M.  &  J.  coffee,  32  ^ ;  5  lbs.  lard 
at  125*;   1  broom,  35^;   10  lbs.  G.  sugar  at  6.]^;  3  lbs.  codfish  at  15^. 


RETAIL   GROCERY    lUSINESS  163 

No.  7. —  Mrs.  A.  Waldron,  i  bri.  ajiples,  $2.25;  10  lbs.  lard  at  12^;  10  lbs.  sugar  at 
6]^;  2  lbs.  Rio  coffee  at  20^;   i  lb.  Y.  H.  tea,  50^. 

No.  8.  —  C.  H.  Stratton,  Elm  House,  10  bu.  potatoes  at  55^;  i  hf.  cht.,  50  lbs.,  E.  B. 
tea  at  50^;  i  bale,  125  lbs.,  M.  &  J.  coffee  at  30^;  5  doz.  S.  F.  ei,'gs  at  22^';  i  case 
Germea,  36  pkgs.,  $4.50;    i  brl.  oatmeal,  $4.75  ;    i  bx.  prunes,  50  lbs.,  $6. 

No.  9.  —  Chas.  A.  Dodge,  #57  Chestnut  St.,  i  lb.  E.  B.  tea,  60 f' ;  i  lb.  M.  &  J.  coffee, 
32«';  6  lemons,  18^  ;    12  S.  F.  eggs,  24^;    i  brl.  flour,  $5  75  ;   5  lbs.  lard  at  12?. 

No.  10.  —  P.  J.  McGuire,  Cottage  Hotel,  i  gal.  vinegar,  25^';  I  brl.  N.  .S.  Hour,  S5.75; 
5  lbs.  butter  at  24^;  2  cans  C.  milk  at  15^';  i  bottle  O.  oil,  75^;  i  bunch  celery,  15''; 
I  can  chicken,  40  ^. 

Cash  sales  for  the  day,  per  cash  tickets,  $214.12.     (Abstract  sales  sheet  and  cash  hook.) 

Do  not  forget  to  make  proper  entries  on  a  daily  abstract  sales  sheet  (No.  2),  and  also  in 
the  abstract  sales  book.     Number  the  abstract  sales  sheets  consecutively. 

Received  car.h  from  customers  as  follows:  Mrs  F.  Gilford,  $21.39;  ^'-  J-  McGuire,  $50; 
Wm.  Harper,  $18.49;   Mrs.  \Vm.  Hanson,  S20.     (See  form,  page  156.) 

Deposited  $550. 

In  this  set  you  will  not  be  required  to  use  a  check  book,  but  will  keep  an  account  with 
the  bank  on  last  page  of  your  Blank  No.  i.  Head  this  page.  Account  ivi/Zi  City  Bank. 
Write  the  date  the  same  as  in  the  cash  book  ;  in  the  first  explanation  space  write  Deposit ; 
in  the  second  explanation  space.  Currency ;  in  the  first  money  column  the  amount,  $550. 
When  a  check  is  called  for  in  the  transactions,  write  the  date,  the  name  of  the  part)-  to 
whom  the  check  is  given  in  the  first  explanation  space,  for  what  given  in  the  second  ex- 
planation space,  and  carry  the  amount  into  the  second,  or  right-hand  money  column.  The 
difference  at  anv  time  between  the  two  money  columns  will  show  the  amount  of  cash  in  bank. 

Paid  cash  as  follows:  (Checks)  Hackett  Bros.,  invoice  of  Oct.  i,  less  2%  (enter  mer- 
chandise discount  on  credit  side  of  cash  book,  in  first  column,  and  net  amount  of  bill  in 
second  column);  E.  J.  Dunn  Grocery  Co.,  invoice  of  Oct.  i,  less  5%.  (Currency)  Gray 
Bros.,  invoice  of  even  date,  $3.20;  merchandise  purchased  from  market  wagons,  S  11.20; 
salaries,  Stuart,  $12;   Canfield,  $12;   Marsh,  $20;  freight,  $3.42. 

Balance  your  cash  book,  and  bring  down  the  amount  the  same  as  in  double-entry. 

October   15,   19 — 

Bought  of  Park  &Tilford,  New  York,  net  2  mos.,  3   10,  merchandise  as  per  invoice,  $287.90. 

Bought  of  S.  S.  Pierce  &  Co.,  Boston,  net  2  mos.,  2  10,  merchandise  as  per  invoice, 
$468.32. 

Purchased  of  St.  Louis  Milling  Co.,  St.  Louis,  net  4  mos.,  5/10,  merchandise  as  per 
invoice,  $450. 

Purchased  of  Gray  Bros.,  City,  for  cash,  50  heads  cabbage  at  4.'';  i  bu.  turnips,  45^; 
80  brls.  apples  at  $2. 

Purchased  of  Trent  Commission  Co.,  City,  for  cash,  4  tubs  C.  butter,  200  lbs.  at  17^; 
10  baskets  late  peaches  at  65^. 

The  following  sales  slips  have  been  handed  in  by  the  salesmen. 

No.  1.  —  C.  H.  Stratton,  Elm  House,  i  pail  mackerel,  20  lbs.,  $4.25;  i  tub  lard,  60  lbs., 
at  loS^;  I  doz.  tomato  ketchup,  $2.25;  6  doz.  S.  F.  eggs  at  22^;  4  sacks  pastry  flour  at 
S1.50;    I  brl.  N.  S.  flour,  $5.50. 

No.  2.  —  Mrs.  S.  T.  Worthen,  i  brl.  apples,  $2.50;  i  bu.  potatoes,  60 f^,  5  lbs.  butter  at 
25^;   12  S.  F.  eggs,  24^;    I  lb.  M.  &  J.  coffee,  32^. 


1,;j  MODERN   ILLUSTRATIVE   BOOKKEEPING 

No.  3.  -  Mr.  \Vm.  Harper,  20  lbs.  G.  sugar  at  6.\^;  10  lbs.  lard  at  I2f*;  3  cans  corn  at 
10^;   I  lb.  E.  B.  tea,  60^;  4  lbs.  raisins  at  15  ^;   i  broom,  35^. 

No.  4.  —  E.  L.  Corey,  i  brl.  flour,  S5.75;  10  lbs.  tub  butter  at  24^;  \  lb.  pepper  at  40^; 
I  box  sardines,  35^;   12  pickles,  15^. 

No.  5.  —  P.  J.  McGuire,  Cottage  Hotel,  i  case,  36  cans,  tomatoes  at  8^;  i  case,  36  cans, 
corn  at  S^;    i  tub  lard,  40  lbs.,  at  1 1  ^;    i  brl.,  212  lbs.,  sugar  at  6^;   3  doz.  lemons  at  25^. 

No.  6.  K.  B.  Woods,  1  brl.  apples,  S2.50;  i  lb.  E.  B.  tea,  60^;  i  lb.  M.  &  J.  coffee, 
32^;   5  lbs.  print  butter  at  30^;    i  clothesline,  30^. 

No.  7.  —  Chas.  A.  Dodge,  20  lbs.  tub  butter  at  24^;  i  bu.  potatoes,  60^;  i  sack  pastry 
flour.  S1.50;    I  gal.  M.  .sirup,  S1.25;    i  jug,  i^^'- 

No.  8.  —  Mrs.  F.  Gilford,  i  bu.  potatoes,  60^;  2  pkgs.  shredded  wheat  biscuit  at  12.]^; 
10  lbs.  tub  butter  at  24^';    i  ham,  12  lbs.,  at  12^^;    12  S.  F.  eggs,  25^. 

No.  9.  —Mrs.  A.  Waldron,  i  brl.  N.  S.  flour,  $5.75;  5  lb.s.  tub  butter  at  24^;  i  lb.  E. 
B.  tea,  60^;    I  broom,  35^;    i  pkg.  gelatine,  15^;    i  pkg.  Cream  of  Wheat,  15^. 

No.  10.  —  Edward  Austin,  12  S.  F.  eggs,  25?  ;  i  brl.  apples,  $2. 25;  i  bu.  potatoes,  60?; 
1  can  salmon,  24^;    i  bottle  O.  oil,  35^;    i  head  lettuce,  5^. 

No.  11.  —  Mrs.  Wm.  Hanson,  i  brl.  N.  S.  flour,  $5.75;  i  bu.  potatoes,  60^;  20  lbs.  (. 
sugar  at  6}J;   |  cht.,  iS  lbs.,  Y.  H.  tea  at  45^. 

No.  12. — A.  B.  Ryder,  i  brl.  N.  S.  flour,  S  5.75  ;  i  bu.  potatoes,  60  >^;  i  brl.  apples, 
$2.25;    1  bottle  ketchup,  22^;    i  qt.  beans,  10?';    i  lb.  pork,  12^. 

Cash  sales  for  the  day,  per  cash  tickets,  S  184.96. 

Received  cash  from  customers  as  follows:  Mrs.  S.  T.  Worthen,  Sept.  account,  S 23.45; 
A.  B.  Ryder,  S44.28;  Wm.  Harper,  $20;  Edward  Austin,  S  28.74;  E.  L.  Corey,  S  18.96: 
Mrs.  Wm.  Hanson,  Su.42. 

Received  of  C.  H.  Stratton  his  note  at  4  mos.,  with  interest,  for  S  21 2.40,  to  balance  his 
account  to  Oct.  ist.     (ICnter  in  journal  and  bill  book.) 

Had  your  note  at  90  days  for  $  100  discounted  at  the  City  Bank,  and  received  credit  for 
the  net  proceeds. 

Deposited  $  125. 

Paid  cash  as  follows:  (Checks)  second-hand  safe,  purchased  of  Diebold  Safe  Co., 
Sioo;  S.  M.  Crockett  &  Co.,  invoice  of  8th  inst.,  less  3  %;  American  Sugar  Refining  Co., 
invoice  of  Oct  I,  less  i  %  ;  Gray  Bros.,  invoice  of  even  date,  $162.45;  Trent  Commission 
Co.,  invoice  of  even  date,  S40.50.  (Currency)  office  desk  and  fixtures,  S30;  salaries, 
Stuart,  S12;  Marsh,  $20;  Canfield,  S12;  freight,  S  57.42. 

(Student)  drew  cash  for  i)rivate  use,  S50. 

Remember  to  balance  your  cash  book. 

October  22,    19— 

Purchased  of  Gray  Bros.,  City,  for  cash,  10  brls.  apples  at  $2;  50  bu.  ])otatoes  at  45  f'; 
30  doz.  case  eggs  at  15^. 

Bought  for  cash,  from  market  wagons,  40  doz.  S.  F.  eggs  at  22^;  50  hds.  cabbage  at 
5^;   400  lbs.   squash   at    i^. 

Bought  of  American  Sugar  Refining  Co.,  30  ds.,  i/io,  merchandise  as  ]3er  invoice, 
$124.72. 

Bought  of  S.  S.  Pierce  &  Co.,  Boston,  net  60,  3/10,  merchandise  as  ]ier  invoice,  S468.75. 

Purchased  of  F.  H.  Leggett  &  Co.,  New  York,  net  60,  3/10,  merchandise  as  per  invoice, 
$344-70. 


RETAIL   (JROCERV    BUSINESS  Kw") 

The  following  sales  slips  have  been  handed  in  by  the  salesmen. 

No.  1.  —  A.  B.  Ryder,  i  pail  mackerel,  20  lbs.,  $3-75;  i  sack  pastry  flour.  Si. 50;  12 
S.  F.  eggs,  25^;    I  bo.x  cigars,  $5.50;   5  lbs.  coffee  at  30,''  :    12  oranges,  35?^. 

No.  2. —  Mrs.  \Vm.  Hanson,  i  b.v,  5  lbs.,  codfish  at  12?;  i  ham,  18  lbs.,  at  I2.l,<^;  i 
case  C.  corn,  36  cans,  at  8^;  i  case  C.  tomatoes,  36  cans,  at  S  t* ;  4  sacks  pastry  flour  at 
S1.50;   2  brooms  at  30*^. 

No.  3.  —  Edward  Austin,  i  ham,  12  lbs.,  at  I2,l  P  ;  12  eggs,  25.^  :  10  lbs.  G.  sugar  at  6.\)^; 
2  lbs.  coff(;e  at  32^;    i  sack  pastry  flour,  $  1.50;    i  bottle  bluing,  lof-';    i  can  chicken,  40^. 

No.  4.  —  Mrs.  A.  Waldron,  i  can  chicken,  40?^;  i  bunch  celery,  15^;  i  bottle  O.  oil, 
75 '■• ;    I  5-lb.  can  coffee.  Si. 50;    i  lamp,  50'';   5  gals.  K.  oil  at  13?;    i  clothesline,  30,^. 

No.  5.  —  Mrs.  F.  Gilford,  i  brl.  N.  S.  flour,  $5-75  ;  i  can  tongue,  75  f-;  5  bars  I.  soap  at 
5^;    1  bottle  ketchup,  22^;    10  lbs.  G.  sugar  at  6.]^'. 

No.  6.  —  Chas.  A.  Dodge,  5  lbs.  lard  at  12^;  i  ham,  15  lbs.,  at  12.',?;  5  gals.  K.  oil  at 
13?;    I  box  cigars,  S2.50;    i  broom,  35,*';    12  eggs,  25^;    12  bananas,  25)^. 

No.  7.  —  Mrs.  S.  T.  Worthen,  i  cake  Sapolio,  10^;  2  lbs.  coffee  at  32, «^;  5  lbs.  lard  at 
I2t':    I  brl.  N.  S.  flour,  $5-75;    12  bananas,  25,«.'. 

No.  8. --- C.  H.  Stratton,  Elm  House,  500  cigars  at  S35  per  M.  ;  200  cigars  at  S55  per 
M.  ;  I  ham,  26  lbs.,  at  12^;  i  brl.  N.  S.  flour,  $5.50;  6  doz.  S.  F.  eggs  at  22  P  ;  20  doz.  ca.se 
eggs  at  le.c';  i  tub  butter,  52  lbs.,  at  22?;  i  brl.  G.  sugar,  216  lbs.,  at  6,'*;  I  cht.  Y.  H. 
tea,  60  lbs.,  at  40^. 

No.  9.  —  W'm.  Harper,  i  sack  pastry  flour,  $  1.50  ;  10  lbs.  tub  butter  at  24 C  ;  2  lbs.  cheese 
at  161';   5  gals.  K.  oil  at  13^;    i  brl.  apples,  $2. 50;    12  oranges,  35?. 

No.  10.  —  E.  L.  Corey,  i  ham,  16  lbs.,  at  12^^;  20  lbs.  G.  sugar  at  61^;  i  lamp,  40t'; 
I  5-lb.  can  coffee,  $1.50;  3  gals.  K.  oil  at  15^. 

No.  11.  —  P.  J.  McGuire,  Cottage  Hotel,  200  cigars  at  $35  per  M. ;  i  brl.  N.  S.  flour, 
$5. 50;  I  doz.  T.  ketchup,  S2  ;  i  tub  butter,  50  lbs.,  at  22(^;  i  cht.  Y.  H.  tea,  60  lbs.,  at 
40.^;  5  gals.  K.  oil  at  i3,<^;    i  lb.  baking  powder,  50,^. 

No.  12.  —  E.  B.  Woods,  i  sack  pastry  flour,  S1.50;  2  lbs.  Rio  coffee  at  20«';  5  lbs.  lard 
at  12C;  I  lb.  chocolate,  30^;  i  can  tongue,  75 P;  i  bottle  Worcestershire,  40^;  i  pail 
mackerel,  10  lbs.,  S2.25. 

Cash  sales  for  the  day,  per  cash  tickets,  S  242.36. 

Received  cash  from  customers  as  follows  :  P.  J.  McGuire,  S50;   Mrs.  A.  Waldron,  S20. 

Had  your  note  at  4  mos.  for  $500  discounted  at  the  City  Bank,  and  received  credit  for 
the  net  proceeds. 

Deposited  S225. 

Paid  cash  as  follows:  (Checks)  Park  &  Tilford,  in\'oice  of  15th  inst.,  S2S7.90,  less  3%, 
St.  Louis  Milling  Co.,  invoice  of  15th,  $450,  less  5%.  (Currency)  Gray  Bros.,  S47;  goods 
from  market  wagons,  Si5-3o;  freight  and  cartage,  $11.32;  salaries,  Canfield,  S12;  Stuart, 
S  12  ;  Marsh,  $20. 

October  29,   19- 

Is  your  cash  book  balanced  .' 

Purchased  of  Williams  &  Andrews,  City,  for  cash,  2  b.xs.  oranges  at  S3. 50;  2  bxs. 
lemons  at  S3  ;  4  tubs  Cr.  butter,  240  lbs.,  at  19.^ ;   5  b.xs.  cheese,  252  lbs.,  at  1 1  ?. 

Purchased  of  Cobb,  Bates  &  Yerxa,  Boston,  subject  to  sight  draft  in  10  days,  merchan- 
dise as  per  invoice,  S  262.74. 

Bought  of  Park  &  Tilford,  New  York,  net  60,  210,  merchandise  as  per  invoice,  S68.74. 


lljtj  MODERN    ILLUSTRATIVE   BOOKKEEPING 

Bought  of  F.  H.  Leggett,  New  York,  net  4  mos.,  310,  merchandise  as  per  invoice,  $  168.94. 

Purchased  of  S.  S.  Pierce  &  Co.,  Boston,  net  60,  3 '10,  merchandise  as  per  invoice,  S  88.45. 

Purchased,  for  cash,  country  produce  amounting  to  S  16.42. 

The  following  sales  slips  have  been  handed  in  by  the  salesmen. 

No.  1.  —  E.  B.  Woods,  20  lbs.  tub  butter  at  22^;  15  lbs.  G.  sugar  at  6]/^;  5  gals.  K.  oil 
at  13^;    i  cht.  V.  11.  tea,  15  lbs.,  at  40^;    i  lb.  baking  powder,  50^. 

No.  2.  —  P.  J.  McGuire.  Cottage  Hotel,  2  hams,  47  lbs.,  at  I2>?;  i  brl.  oatmeal,  $4.75  ; 
I  case  Cr.  of  Wheat,  36  pkgs.,  at  I2i^;  6  brooms  at  25^;  6  doz.  oranges  at  25^;  3  doz. 
lemons  at  20^. 

No.  3.  —  K.  L.  Corcv,  i  jcal.  maple  sirup,  3125  ;  5  bu.  potatoes  at  60?  ;  i  broom,  35.C  ; 
I  can  o.\  tongue,  75^;   i  b.\.  mustard,  15^. 

No.  4. — Wm.  Harper,  i  ham,  18  lbs.,  at  12.I?;  3  cans  peaches,  50^;  5  lbs.  coffee  at 
30^;    10  lbs.  G.  .sugar  at  6.]^;    i  b.\.  gelatine,  15^;    12  oranges,  35^. 

No.  5.  —  C.  H.  Stratton,  Elm  House,  i  tub  lard,  54  lbs.,  at  10^;  20  lbs.  print  butter  at 
23^;  10  doz.  S.  F.  eggs  at  24^;  i  case  Germea,  36  pkgs.,  at  I2.V^;  12  b.xs.  sardines  at  25*^: 
I  b.\.  lemons,  S4.50;  i  brl.  pastry  flour,  S6;  i  ham,  24  lbs.,  at  12^;  |  cht.  E.  B.  tea,  15 
lbs.,  at  50  «. 

No.  6.  —  Mrs.  S.  T.  Worthen,  20  lbs.  G.  sugar  at  6i«':  5  lbs.  Y.  H.  tea  at  45^;  i  can 
ox  tongue,  75^;  6  lemons,  15,'-';   5  gals.  K.  oil  at  13^^. 

No.  7.  —  A.  B.  Ryder,  J  cht.  E.  B.  tea,  15  lbs.,  at  50^;  i  bu.  potatoes,  60^;  12  S.  F. 
eggs.  26,^';    I  lam])  chimney,  10^;    i  can  tomatoes,  10/;   i  ham,  14  lbs.,  at  12.]^. 

No.  8.  —  Mrs.  Wm.  Hanson,  i  brl.  N.  S.  flour,  S5.75;  25  lbs.  oatmeal  at  5^;  i  pail 
mackerel,  10  lbs.,  $2. 25  ;    i  brl.  apples,  $2.50;  20  lbs.  G.  sugar  at  6.]^  ;   5  gals.  K.  oil  at  13^. 

No  9.  —  Edward  Austin,  12  S.  F.  eggs,  26^;  5  lbs.  E.  B.  tea  at  50^  ;  10  lbs.  tub  butter 
at  22  V';    I  b.\.  mustard,  15)^;  2  cans  corn  at  10^. 

No.  10.  -Mrs.  A.  Waldron,  3  lbs.  print  butter  at  26^;  i  sack  pastry  flour,  S1.50;  i  ham, 
12  lbs.,  at  12.!^;    10  lbs.  G.  sugar  at  6i^;    i  gal.  molasses,  40^;   i  lb.  baking  powder,  50)^^. 

No.  11.  —  Mrs.  F.  Gilford,  5  gals.  K.  oil  at  13^;  i  brl.  apples,  S2.75;  5  lbs.  coiTee  at 
30^;   I  lamp,  35^;    I  broom,  30^;  ]  gr.  matches,  25^. 

No.  12.  —  Chas.  A.  Dodge,  12  S.  V.  eggs,  26^;  i  lb.  coffee,  32^;  i  brl.  apples,  $2.50; 
I  wash  tub.  Si- 10;   i  lb.  chocolate,  30^. 

Cash  sales  for  the  day,  {)er  cash  tickets,  $2 16.48. 

Received  cash  as  follows:   P.  J.  McGuire,  S50;   Mrs.  A.  Waldron,  $10. 

Deposited  S  1 50. 

Paid  cash  as  follows:  (Checks)  Williams  &  Andrews,  invoice  of  even  date,  SS6.32; 
5  tons  coal,  S25.  (Currency)  salaries,  Canfield,  S12;  Stuart,  S12;  Marsh,  S20;  country 
produce,  S  16.42;   freight,  S6.88. 

Gave  -S.  S.  Pierce  &  Co.,  Boston,  your  note  at  20  days,  dated  Oct.  25th.  with  interest, 
for  amount  of  invoice  of  Oct.  15th,  less  2  %. 

Posting. — You  will  now  post  your  books.  Remember  that  in  single-entry  you  post 
only  such  transactions  as  affect  personal  accounts,  and  that  only  personal  accounts  appear 
in  either  the  general  ledger  or  the  card  ledger. 

The  card  ledger  debits  will  be  taken  entirely  from  the  statement  sheets.  Remove  these 
statements  from  the  file,  and  post  only  the  totals  to  the  corresponding  cards  of  the  card 
ledger,  placing  the  date  of  each  sale  in  the  explanation  space.  (See  model  ledger  card, 
p:i'.;e  160. )     Remember  to  keej)  your  card  ledger  in  alphabetic  order. 


RETAIL   GROCERY    BL'SIXESS 


1(17 


Statement  of  Resources  and  LiABii.iTrEs 
Henrv  T.   Brown,  October  31,   19 — 


1                                            Rksoukces 

Cash,  balance  on  hand. 

253 

72 

Merchandise,  per  inventory. 

349' 

18 

Furniture  and  fixtures. 

250 

00 

1  . 

Notes  receivable,  per  bill  book. 

197 

25 

1 

Accounts  receivable,  per  card  ledger,  as  under : 

Mrs.  S.  T.  Wood. 

25 

to 

H.  }!.  Runyon. 

36 

25 

John  Stratton. 

114 

87 

Mrs.  U'm.  Howard, 

175 

23 

Wm.  Harper. 

212 

'5 

Charles  Kennedy. 

25 

20 

Edward  L.  Corlis. 

■3 

10 

Mrs.  A.  Wallace, 

45 

12 

P.  J.  McGuire. 

26 

30 

Mrs.  Fred  Young. 

52    10 

E.  B.  Woodrut^", 

29    75 

Charles  Doyle. 

Total  resources 

18 

50 

4965 

82 

Liabilities 

Notes  payable,  per  bill  book. 

985 

95 

Accounts  payable,  per  general  ledger,  as  under : 

Adams  &  Hackland. 

482 

35 

American  Sugar  Refining  Co., 

216 

20 

Park  &  Tilford. 

75 

68 

J.  J.  Powers  Co.. 

517 

22 

F.  H.  Leggett  &  Co.. 

35' 

46 

Cobb,  Bates  &  Young. 

Total  liabilities 
Present  Worth, 

162 

47 

2791 

33 

2174 

49 

The  card  ledger  credits  will  be  found  on  the  debit  side  of  the  cash  book  and  in  the 
journal.  Turn  to  your  cash  book  and  post  all  cash  entries  which  affect  the  accounts  of 
persons  whose  names  appear  in  the  card  ledger.  (See  form,  page  160. )  Place  a  check  mark 
against  each  name  in  the  cash  book.  Turn  to  your  journal  and  post  any  items  which  may 
affect  customers'  accounts,  placing  a  check  mark  against  each  item  to  indicate  posting. 

Your  own  account  and  the  accounts  with  those  business  concerns  of  whom  you  purchase 
goods,  and  all  other  personal  accounts,  except  those  with  customers,  will  be  kept  in  the 
general  ledger,  and  the  postings  to  these  accounts  will  be  made  from  the  journal,  the 
purchase  book,  and  the  cash  book.  Open  these  accounts  in  your  general  ledger  (Blank 
'No.  2).  Allow  one  third  of  a  page  to  each  account  beginning  on  page  2  of  the  blank.  Use 
the  first  page  of  the  blank  for  an  alphabetic  inde.x  to  your  general  ledger.  Index  an 
account   immediately  after  it  is  opened. 

Post  from  the  purchase  book  the  amount  of  each  invoice  of  goods  bought  on  account,  to 
the  credit  of  the  account  named  ;  then  post  from  the  journal  and  the  cash  book  such  items 
as  should  be  carried  to  these  accounts.  Place  a  check  mark  against  each  cash  item.  See 
explanation  of  cash  book,  page  1 56. 


108 


MODERN   U.I.ISTK.\TIVE   BOCIKKEEPIXG 


Foot  and  rule  the  purchase  book  and  the  abstract  sales  book. 

Having  completed  your  posting,  prove  the  same  (see  Proof  of  Posting,  page  151"). 

Make  an  abstract  of  your  card  ledger  on  a  sheet  of  paper,  showing  the  amount  due 
from  each  customer,  and  total  amount  due. 

From  your  bill  book  find   the  amount  of  the  notes  receivable  in  your  possession,  ami 
from  your  cash  book  find  the  amount  of  cash  on  hand  and  in  bank. 

l-"rom  vour  general  ledger  find  tiie  amount  due  \our  creditors,  and  from  vour  bill  book 
the  amount  of  notes  you  have  outstanding. 

Your  inventory  shows  the  following  : 

Merchandise  on  hand,   valued  at  S4400.63, 
Furniture  and  fi.xtures,       "        "        125.00. 

From  the  above  data  jirepare  a  statement  of  resources  and  liabilities,  according  to  the 
model  on  page  167. 

Find  the  net  gain  or  the  net  loss  according  to  the  form  given  below. 

Pkopkietor's  St.xtement 
October  31,   ig — 


lltni-y  T.  BruA  :., 

a 
U 

il 

invested 

withdrew                                               1 
net  investment 
present  worth 
•  A'V/  Z.OSS 

i 

250 

2250 
2174 

49 

7S 

</ 

Carry  the  net  loss  shown  in  vour  proprietor's  statement  to  the  debit  side  of  the  pro- 
prietor's account  in  the  ledger,  and  close  the  account  in  the  same  way  as  in  double-entry, 
bringing  the  balance  down  under  the  date  jVor.  i. 

*  In  this  and  other  printed  mudcls,  words  and  amounts  that  should  be  written  in  red  ink  are  indicated  hy  the  use  of 
italic  type. 

RETAIL    CROCFRV    I'.USIXIv S.S  —  Con-tinued 


PRELIMINARY   "WORK 


ADMISSION    OF    PARTNER    AND    CHANGE    TO 
DOUBLE-ENTRY 


November  i,   19 — 

The  business  of  the  past  month  has  shown  a  small  loss,  but  as  the  sales  are  increasing, 
you  have  decided  to  continue  the  business  and  take  a  partner,  J.  M.  Marsh,  your  jiresent 
delivery  clerk,  and  to  add  a  department  of  meats,  fish,  and  ])oultry  to  vour  grocery  business. 

You  have  decided  to  keeji  the  books  by  double-entry  and  to  put  them  into  double-entry 
form  before   forming  the   partnership.      Xo  new  books  will  be  required. 

Changing  from  Single-  to  Double-Entry.  —  To  change  a  set  of  books  from  single-  to 
d;iub]e-entry  it  is  only  necessary  to  open  such  new  accounts  in  the  ledger  as  shall  cause  it 
to  exhibit  all  the  resources  and  liabilities  as  shown  by  the  statement  of  resources  and 
liabilities. 

From  your  statement  of  resources  and  liabilities  of  October  31  make  an  entry  in  the  jour- 
nal, similar  to  an  0]5ening  entry,  according  to  the  following  model. 


RETAIL   CROCERV    I'.L'SINESS 

November   i,   19 — 


1G9 


Cash 

Merchandise 
Furniture  and  Fixtures 
Notes  Receivable 
Accounts  receivable 

Notes  Payable 

Accounts  payable 

John  D.  Bruce 
This  entry  made  to  change  books 


per  cash  book 

per  inventory 

valued  at 

per  bill  book 

per  card  ledger 

per  bill  book 

per  general  ledger 

present  worth 

from  single-entry  to  double-entry 


3'5 

26 

4837 

63 

275 

182 

3' 

489 

-5 

1085 
2965 

2047 

75 
87 
83 


In  posting  the  opening  entry  check  but  do  not  post  the  personal  accounts,  including  the 
proprietor's  account,  as  they  are  ah-eady  debited  and  credited  with  the  proper  amounts ;  the 
customers'  accounts  in  the  card  ledger,  and  the  creditors'  and  proprietor's  accounts  in 
the  general  ledger.  Do  not  post  Cash  account,  as  that  account  is  already  shown  in  the  cash 
book;  check  the  item.  The  only  accounts  to  be  posted  from  the  opening  entry  are  Mer- 
chandise, Furniture  and  Fixtures,  Notes  Receivable,  and  Notes  Payable.  Open  these 
accounts  in  the  general  ledger,  allowing  one  third  of  a  page  for  each,   and  post. 

Notes  Receivalile  and  Notes  Payalile  are  tlie  ledger  titles  now  used  by  most  accountants  for  accounts  with 
botli  notes  and  drafts,  instead  of  the  old  titles.  Bills  Receivable  and  Bills  Payable.  You  will  use  tlie  new  titles 
hereafter  in  your  work. 

The  debits  and  credits  should  now  be  equal,  and  to  prove  this  you  should  take  a  trial 
balance,  including  the  balance  of  cash  as  shown  in  your  cash  book,  and  the  balance  of  cus- 
tomers' accounts  as  shown  in  }our  card  ledger.  Your  books  are  now  ready  to  be  kept  by 
double-entrv.  The  journal  and  cash  book  are  to  be  kept  as  in  earlier  work  in  double-entry. 
Hereafter,  in  order  to  have  the  merchandise  account  show  the  purchases  and  sales  for  each 
month,  the  footing  of  the  Amount  of  Invoice  column  of  the  purchase  book  should  be  posted 
to  the  debit  of  Merchandise  at  the  end  of  the  month,  as  it  shows  all  purchases  of  merchan- 
dise ;  and  the  footing  of  the  Monthlv  Sales  column  of  the  abstract  sales  book  should  be 
posted  to  the  credit  of  Merchandise,  as  it  shows  all  the  sales  of  merchandise. 

By  agreement  with  J.  M.  Marsh,  your  partner,  the  new  firm  takes  over  all  the  resources 
and  assumes  all  the  liabilities  of  your  present  business,  and  Marsh  invests  property  of  equal 
value  as  described  on  the  following  page. 

Articles  of  copartnership  have  been  drawn  u])  by  your  attorney  and  executed  by  you 
and  your  partner,  showing  the  investment  of  each  partner,  and  containing  the  following 
conditions  : 

You  (Student)  shall  act  as  bookkeeper  and  cashier,  and  shall  have  general  charge  of  the 
inside  management  of  the  store;  shall  receive  all  cash,  sign  all  notes,  checks,  and  other 
negotiable  instruments  of  the  firm,  and  attend  to  the  purchase  of  all  groceries. 

J.  M.  Marsh  shall  have  charge  of  the  delivery  of  goods,  the  taking  of  orders,  with  such 
assistance  as  mav  be  necessary,  and  shall  attend  to  the  buying  of  all  country  [iroduce  and 
provisions. 

Each  partner  shall  give  his  entire  time  to  the  business,  and  shall  be  entitled  to  draw,  for 
living  expenses,  cash  not  to  exceed  S  lOO  per  month,  or  its  equivalent  in  goods  from  the  store 
at  cost. 

The  profits  and  losses  of  the  business  shall  be  divided  equally  at  the  end  of  each  year, 
or  at  such  period  as  the  books  may  be  closed. 


170 


MODERN    ILI.USrUATlVE   BOOKKEEPING 


A  bill  of  sale  has  been  drawn  uj)  by  your  attorney  and  executed  by  vou,  disposing  of  your 
entire  resources  to  the  firm  of  (Student)  &  Marsh,  subject  to  the  payment  of  your  liabilities 
as  shown  by  your  statement  of  October  31.  This  bill  of  sale  represents  your  investment  in 
the  new  firm. 

The  firm  of  (Student)  &  Marsh  will  continue  to  use  the  same  set  of  books  as  were  pu' 
viously  used  in  the  business,  and  the  ledger  already  contains  the  accounts  representing  ycn.i 
investment.  Vou  should  now  make  the  proper  entries  for  the  investment  of  J.  M.  Mavsli, 
which  the  firm  receives  from  him  as  follows: 

Note  in  his  favor,  dated  Sept.  4,  at  four  months  from  date,  signed  by  Kdward  W. 
Lawrence,  indorsed  by  E.  \V.  Lynch.  Face  of  note,  S942.68;  discount  for  unexpired  tin-.e. 
$  10.06. 

Note  in  his  favor,  dated  Sept.  19,  at  four  months,  with  interest,  signed  by  George  M. 
Kelly,  indorsed  by  \Vm.  H.  Kelly  &  Co.  F'ace  of  note,  S622.85;  interest  due  on  note  to 
date,  S4.46. 

Horse,  wagon,  and  harness,  now  used  for  delivering  goods,  valued  at  S250. 

Cash  S57S.37,  which  is  the  balance  necessary  to  make  his  investment  equal  your  own 
present  worth,  as  shown  by  your  statement  of  October  31. 

P'oliowing  are  model  forms  for  the  necessary  journal  and  cash  book  entries. 

1 

John  I).  liiiice  and  .Xrlhur  Lyman  li.nve  this  {lay  formed  a  partner- 
ship under  the  tirm  name  of  Bruce  &  Lyman,  to  take  over  and  con- 
tinue the  bu.siness   lieretofore  con  ducted  by  said  John  D.  Bruce. 

The  investment  of  Bruce  is  repr  esented  by  the  resources  of  his 
former  business  which  he  has  transferred  to  the  firm,  less  his  lia- 
bilities which  are  assumed  by  tlie  tirm,  as  shown  by  above  entry. 

The  investment  of  Lyman  is  rep  resented  by  the  following  entry : 


Notes  Receivable 

Interest 

Horses  and  Wagons 

Cash 

Discount 

Arthur  Lvman 


per  bill  book 

on  above 

valued  at 

per  cash  book 

on  notes  receivable 

net  investment 

C.^SH 


500, 

3   75 

225 

321    58 

2   50 

1 

2047  I  f'j 

19- 

Nov. 


Arthur  Lvman 


invested 


1321    58 


You  are  now  ready  to  proceed  with  the  second  month's  work  in  the  retail  grocerv 
business. 

TRANSACTIONS 

NOVKMBI'.K     I,     1 9 

Engaged  Geo.  Carter  as  meat  cutter,  at  S15  per  week,  and  Willis  Holt  as  driver  and 
order  clerk,  at  S  15  per  week. 

Fmchased  of  Armour  &  Co.,  Chicago,  30  ds.,  2   10,  dressed  meat,  as  per  invoice,  S  132.21. 

Pinchased  of  Swift  &  Co.,  Chicago,  30  ds.,  2/ 10,  beef,  mutton,  and  lard,  as  per  invoice, 
$i42.3cS. 


RETAIL   GROCERY    BUSIXESS  171 

Bought  of  Gray  Bros.,  City,  for  cash,  5  tubs  butter,  212]  lbs.,  at  20^';  2  bxs.  cheese, 
104  lbs.,  at  11^. 

Bought  of  E.  J.  Dunn  Grocery  Co.,  City,  4  mos.,  5  10,  2  hf.  chts.  Japan  tea,  120  lbs., 
at  2S^\  2  hf.  chts.  v..  B.  tea,  120  lbs.,  at  32?;  2  bales  Mocha  coffee,  300  lbs.,  at  25?;  2 
mats  Java  coffee,  150  lbs.,  at  26,^;    i  pail  cinnamon,  25  lbs.,  at  25?. 

Purchased  of  M.  S.  Newton  &  Sons,  Boston,  30  ds.,  2   10,  fish,  as  per  invoice,  Js  18.39. 

Bought  country  produce  from  market  wagons,  for  cash,  S  1S.44. 

The  following  sales  slips  have  been  handed  in  by  the  salesmen. 

No.  1.  —  Chas.  A.  Dodge,  8  lbs.  rib  roast  at  i6«'';  20  lbs.  G.  sugar  at  6,',/;  12  lemons, 
25^  ;    I  brl.  Graham  flour,  $5.25  ;    i  b.\.  macaroni,  35, t'  ;    i  bottle  Worcestershire,  40 <^. 

No.  2.  —  Thomas  B.  Tucker,  Tucker's  Tavern,  10  lbs.  porterhouse  at  22*';  6  lbs.  Iamb 
chops  at  16^;  22  lbs.  ham  at  12^;  6  doz.  S.  F.  eggs  at  25,'';  12  lbs.  fish  at  lo^";  5  bu. 
potatoes  at  60,'';    i  case  Germea,  36  pkgs.,  at  \2^. 

No.  3.  —  Mrs.  Fred  Gilford,  7  lbs.  pork  roast  at  12?;  20  lbs.  tub  butter  at  241';  i  sack 
Graham  flour.  Si. 25  ;   I  lb.  cinnamon  at  50'';   \  bu.  beans  at  S3  ;    i  bottle  T.  ketchup,  22.^. 

No.  4.  —  E.  B.  Woods,  12  lbs.  turkey  at  18^;  i  qt.  oysters,  40^;  i  can  Java  coffee,  10 
lbs.,  at  30<*;    i  gal.  molasses,  50'-';    i  lb.  cocoa,  SS'';   3  doz.  S.  F.  eggs  at  28*'. 

No.  5.  —  Mrs.  Wm.  Hanson,  i  tub  butter,  42  lbs.,  at  22'';  4  doz.  S.  F.  eggs  at  2S'';  8 
lbs.  pork  roast  at  15?;  10  lbs.  beef  roast  at  \6'?  ;  5  lbs.  round  steak  at  14'-';  5  lbs.  Java 
coffee  at  30'-,    i  case  C.  peas,  36  cans,  at  I2,c'. 

No.  6.  —  Wm.  Harper,  7  lbs.  lamb  at  16'";  5  bu.  potatoes  at  60,'-';  I  sack  Graham  flour, 
$  1.25  ;    I  gal.  maple  sirup,  S  1.25  ;   5  lbs.  print  butter  at  2SP  ;    i  bottle  capers,  30*'. 

No.  7.  —  E.  L.  Corey,  8  lbs.  corned  beef  at  12^;  20  lbs.  tub  butter  at  24^;  i  sack  pastry 
flour,  Si-SO;    I  b.\.,  12  lbs.,  prunes,  at  12,^;    i  lb.  baking  powder,  50*';    i   hd.  cabbage,  loP. 

No.  8.  — James  B.  Longley,  Star  Restaurant,  10  lbs.  sirloin  steak  at  18/;  12  lbs.  porter- 
house steak  at  20^;  i  ham,  24  lbs.,  at  i2f';  6  doz.  S.  F.  eggs  at  25K;  i  doz.  T.  ketchup, 
$2.25  :    I  doz.  Crown  olives,  S3;    18  lbs.  turkey  at  16^. 

No.  9.  —  A.  B.  Ryder,  6  lbs.  veal  roast  at  18?;  i  c|t.  oysters,  40^;  3  bu.  ]3otatoes  at  6o(-''; 
20  lbs.  G.  sugar  at  6\^\  i  sack  buckwheat  flour,  $  i  ;  i  gal.  maple  sirup,  S  i--5  ;  1  lb.  bak- 
ing powder,  50^. 

No.  10.  —  C.  H.  Stratton,  20  lbs.  sirloin  steak  at  i  5  ^ ;  12  lbs.  porterhouse  at  iS'';  22  lbs. 
sirloin  roast  at  15^;  10  lbs.  pork  roast  at  12^;  39  lbs.  turkey  at  IS*':  i  brl.  N.  S.  flour, 
S5.50:  I  brl.  Graham  flour,  $4.75;  5  gals,  maple  sirup  at  Si. 15;  i  sack  buckwheat  flour, 
$  I  ;    I  hf.  cht.  Japan  tea,  60  lbs.,  at  35^. 

No.  11.  —  Mrs.  S.  T.  Worthen,  i  pr.  chickens,  9  lbs.,  at  16,^;  i  bu.  potatoes,  60P;  24  lbs. 
tub  butter  at  25^;    i  lb.  baking  powder,  50^. 

No.  12.  —  P.  J.  McGuire,  10  lbs.  sirloin  at  16^;  5  doz.  S.  F.  eggs  at  28^^;  200  cigars  at 
S35  per  M.  :    100  cigars  at  S55  per  M.  ;    15  lbs.  chicken  at  15,^;  6  lbs.  ox  tongue  at  20^. 

Enter  the  sales  on  customers'  monthly  statement  sheets  exactly  as  in  October. 

Cash  sales  for  the  day,  per  cash  tickets.  S 32 1.45. 

Your  cash  book  is  now  the  ordinary  double-entry  cash  book,  and  you  must  always  give 
the  name  of  each  account  affected  by  any  transaction,  the  same  as  in  cash  books  which  you 
used  in  previous  double-entry  work.  Where  cash  merchandise  sales  or  purchases  are  made, 
place  a  check  mark  in  the  ledger  folio  column  of  the  cash  book  opposite  Mci-cltandisc,  a.s 
these  amounts  are  posted  to  the  Merchandise  account  from  the  purchase  book,  and  from  the 
abstract  sales  book,  and  not  from  the  cash  book. 


172  MODERN   ILLLSTUATIVE   1;<  i(  iKKEEPING 

Received  cash  as  follows:  Mrs.  F.  Gilford,  payment  of  October  account,  S 24.25;  E.  B. 
Woods,  on  account,  S25  ;   Mrs.  A.  Waldron,  balance  of  September  account.  $9.48. 

Deposited  S800. 

Paid  cash  as  follows  :  (Checks)  Adams  &  Hackland,  on  account.  S  100;  American  Sugar 
Refining  Co.,  invoice  of  Oct.  22,  less  \'Jo\  F.  H.  Leggett  &  Co.,  invoice  of  Oct.  22,  less 
3'y  ;  Gray  Bros.,  City,  invoice  of  even  date,  S  53-94;  Daniel  Stoneglass,  rent  for  November, 
350.  (Currency)  merchandise  from  market  wagons,  S  18.44;  stamps  and  jiostals,  S2.50; 
replacing  broken  window,  S4.75  ;  freight,  S2.17  (Freight  account);  salaries,  Canfield,  S  12  ; 
Stuart,  S  12;  Carter,  S  15;    Holt,  S  15  (J)<?/rt;7<  J  account). 

(Student)  drew  for  private  use,  cash,  S25.      Marsh  drew  for  private  use,  cash,  S20. 

Gave  S.  S.  Pierce  &  Co.  note  at  30  ds.,  with  interest,  to  pay  invoice  of  Oct.  22,  less  3%. 
{^Xotfs  Payirble  account.) 

Balance  your  cash  book  at  the  close  of  each  day's  business,  as  in  the  October  work,  but 
do  not  rule  the  special  Mdse.  Disct.  column  until  the  end  of  the  month. 

November  S,   19 — 

Purchased  of  Hackett  Bros.,  City,  60  ds.,  2/10,  10  brls.  K.  oil,  642  gals.,  at  gi  ^;  i  hhd. 
Golden  Drip  sirup,  96  gals.,  at  37]^;  2  brls.  salt  pork  at  S6.25. 

Bought  of  S.  M.  Crockett  &  Co.,  60  ds.,  3  10,  5  gross  bluing  at  $7.25;  i  gross  T. 
ketchup,  144  bottles,  at  1 1  >' ;   16  one-gallon  cans  M.  siruj)  at  95*^. 

Bought  of  Gray  Bros.,  Citv,  net  30,  2  10,  5  cases  eggs,  60  doz.,  at  15^;  130  lbs.  turke\ 
at  \l't  \  65  lbs.  chicken  at  12^. 

Purchased  produce  from  market  wagons,  for  cash,  S  28.65. 

Purchased  of  American  .Sugar  Refining  Co.,  New  York,  net  30,  i  '10,  invoice  amounting 
tu  S 69.98. 

Bought  of  Armour  &  Co.,  Chicago,  net  30,  2    10,  invoice  of  ])ork  and  sausage,  S98.37. 

Bought  of  Swift  &  Co.,  Chicago,  net  30,  2   10,  invoice  of  beef  and  mutton,  S  102.40. 

Purchased  of  M.  Newton  &  Sons,  Boston,  net  30,  2   10,  invoice  of  fish  and  oysters,  S  19.69. 

The  following  sales  slips  have  been  handed  in  by  the  salesmen. 

No.  1.  —  E.  L.  Corey,  6  lbs.  chicken  at  iji';  .',  brl.  Graham  flour  at  S5.50;  i  gal.  maple 
sirup.  Si. 25;  ]  bu.  beans,  80.C';  5  gals.  K.  oil  at  \l'r  \  12  lbs.  G.  sugar  at  (>\^  \  i  gal. 
pickles,  50^. 

No.  2.  -Wm.  H;u|)er,  10.]  lbs.  chicken  at  16^;  i  brl.  pastry  flour,  S6;  2  doz.  case 
eggs  at  22^;  12  oranges,  35^;  i  bottle  extract  vanilla,  40^;  2  pkgs.  shredded  wheat, 
25<';    I  broom,  35^. 

No.  3.  —  Mrs.  W'm.  Hanson,  6  lbs.  jiork  chops  at  I2>';  S  lbs.  round  steak  at  14^;  12  lbs. 
sirloin  roast  at  15^;  \\\  lbs.  pork  roast  at  I2>';  i  brl.  jiastrv  flour,  S6;  3  doz.  bananas  at 
20/;   I  gal.  vinegar,  25,^'. 

No.  4.  —  Mrs.  S.  T.  Worthen,  S  lbs.  sirloin  roa.st  at  20>';  A  brl.  G.  flour,  S2.75  ;  12  S. 
E.  eggs,  28^;  2  lbs.  cheese  at  xdf;   i  5-lb.  can  Java  coffee.  Si. 50;   12  lemons,  25^. 

No.  5.  —  Edward  Austin,  2  lbs.  round  steak  at  id?  \  8  lbs.  corned  beef  at  12^;  i  hd. 
cabbage,  10^;  i  bu.  potatoes,  6o,<';  i  cht.  \\.  B.  tea,  15  lbs.,  at  nf  \  i  bottle  T.  ketchup, 
24'' ;   12  eggs,  28.^. 

No.  6.  —  Mrs.  A.  Waldron,  8  lbs.  lamb  roast  at  i6<' ;  20  lbs.  G.  sugar  at  6.]  ^' ;  5  lbs.  tub 
butter  at  25^  ;    i  brl.  Graham  flour,  S5.25  ;    i  gal.  pickles,  50?  ;  2  pkgs.  shredded  wheat,  25;^. 

No.  7. — Chas.  A.  Dodge,  9  lbs.  turkey  at  i6<';  2  qts.  cranberries  at  10'';  i  bu.  {pota- 
toes, 60^^;   12  case  eggs,  22  f  ;    i  bo.\  cigars,  S5.50;   i  gal.  vinegar,  25.^'. 


RETAIL   (IKliCKKY    BUSINESS  173 

No.  8. — James  Ix  Longlev,  i  sack  buckwlieat  tlour.  Si. 50;  i  gal.  M.  sirup,  S1.25;  5 
gals.  S.  pickles  at  40'";  i  brl.  K.  oil,  42  gals.,  at  1 1  ^  ;  20  lbs.  chicken  at  14'';  28  lbs.  lib 
roast  at  14^;    16  lbs.  pork  roast  at  11'';    15  lbs.  sir.  roast  at  15  f^' ;    17  lbs.  porterhouse  at  i8,t'. 

No.  9.  —  Mrs.  F.  Gilford,  g.i  lbs.  turkey  at  i6f' ;  i  qt.  oysters,  40'';  20  lbs.  G.  sugar  at 
6.5^'".    I  bu.  potatoes,  60^;    i  lb.  baking  powder,  50^;    12  oranges,  35'^'. 

No.  10.  —  P.  J.  McGuire,  lo  lbs.  sirloin  roast  at  i6'-;  20  lbs.  rib  roast  at  14^';  10  lbs. 
pork  roast  at  12^ ;  16  lbs.  turkey  at  i6t";  i  brl.  N.  S.  flour,  S5.50;  i  brl.  pastry  flour, 
S5.75  ;    I  doz.  T.  ketchup,  $2;  6  doz.  oranges  at  25^. 

No.  11.  —  E.  B.  Woods,  II I  lbs.  sirloin  roast  at  16^;  5  bu.  E.  R.  potatoes  at  55^;  i 
brl.  apples,  $2.75;  10  lbs.  lard  at  12.}^;  20  lbs.  G.  sugar  at  61 'i  \  i  bottle  bluing,  10^; 
\  hrl.  (i.  flour  at  S5.50. 

No.  12.  —  Thomas  B.  Tucker,  12  doz.  S.  F.  eggs  at  26^;  15  lbs.  sirloin  steak  at  16^; 
I  brl.  N.  S.  flour,  $5.50;  i  brl.  pastry  flour,  $575;  i  brl.  oatmeal,  35-25;  i  sack  buck- 
wheat, $1.50;  5  gals.  M.  sirup  at  Si.  15. 

No.  13. — C.  H.  Stratton,  22  lbs.  porterhouse  at  18/;  31  lbs.  beef,  sirloin,  at  15^;  26 
lbs.  lamb  at  I  5  ^ ;  12  lbs.  pork  chops  at  10^;  10  bu.  potatoes  at  55^;  i  mat  Java  coffee,  75 
lbs.,  at  28^;  48  lbs.  butter  at  25?  ;   30  doz.  case  eggs  at  18^. 

Cash  sales  for  the  day,  per  cash  tickets,  $  388.74. 

Received  cash  as  follows:  A.  B.  Ryder,  October  account,  S 38.30;  Mrs.  S.  T.  VVorthen. 
on  account,  S15;  P.  J.  McGuire,  balance  of  September  account,  S  19.34;  T.  B.  Tucker,  on 
account,  S30. 

Had  the  note  of  E.  VV.  Lawrence  discounted  at  the  City  Bank,  and  received  credit  for 
the  net  proceeds.     Face  of  note,  $942.68;  discount,  $8.96. 

Deposited  S300. 

Paid  cash  as  follows:  (Checks)  Cobb,  Bates  &  Yerxa,  draft  at  sight  for  invoice  of 
Oct.  29;  Park  &  Tilford,  invoice  of  Oct.  29,  less  2%;  F.  H.  Leggett  &  Co.,  invoice 
of  Oct.  29,  less  3  %  ;  Armour  &  Co.,  invoice  of  Nov.  i,  less  2  %  ;  Swift  &  Co.,  invoice  of 
Nov.  I,  less  2%;  M.  S.  Newton  &  Sons,  invoice  of  Nov.  i,  less  2%;  bay  horse,  S125 
{Horses  and  Wagons  account);  delivery  wagon,  Sioo.  (Currency)  merchandise  from 
market  wagons,  S28.65;  cleaning  windows,  $1.25;  board  of  horse,  S5;  harness,  S31; 
freight,   S1.96;  salaries,  Canfield,   S12;   Stuart,   S12;   Carter,   Si5;   Holt,   5 15. 

Received  of  C.  H.  Stratton  his  note  at  60  ds.,  with  interest  added,  to  settle  October 
account.     Amount  of  account,  $266.09;  interest,  60  ds.,   $2.66. 

Returned  to  E.  J.  Dunn  Grocery  Co.,  i  bale  Mocha  coffee,  150  lbs.,  at  25^.  Too  much 
of  this  kind  was  ordered. 

November   15,   19 — 

Purchased  of  Armour  &  Co.,  Chicago,  net  30,  2/10,  invoice  amounting  to  $116.20. 
Purchased. of  Swift  &  Co.,  Chicago,  net  60,  3    10,  invoice  amounting  to  $178.95. 
Bought  of  M.  S.  Newton  &  Sons,  Boston,  net  30,  2/10,  invoice  amounting  to  $28.44. 
Bought  of  S.  S.  Pierce  &  Co.,  Boston,  60  ds.,  3/10,  invoice  amounting  to  $246.39. 
Purchased  of  Park  &  Tilford,  New  York,  net  30,  2/10,  invoice  amounting  to  $63.44. 
Bought  of  Cobb,  Bates  &  Yer.xa,  Boston,  acceptance  30  ds.  from  date,  invoice,  S213.42. 
Bought  merchandise  from  market  wagons,  for  cash,  $63.42. 
The  following  sales  slips  have  been  handed  in  by  the  salesmen. 

No.  1.  —  C.  H.  Stratton,  i  brl.  G.  sugar,  217  lbs.,  at  6/;  i  brl.  N.  S.  flour,  $5.50;  i 
brl.  pastry  flour,  S5.75  ;   i  b.\.  oranges,  S4.75 ;  20  doz.  S.  F.  eggs  at  25^;  20  lbs.  fresh  fish 


174  MODERN   ILLUSTRATIVK   liOOKKEEPING 

at  1 1 5^ ;  12  lbs.  sirloin  steak  at  I5>^ ;  22  lbs.  sirloin  roast  at  15)?;  500  cigars  at  $35  per  M.; 
200  cigars  at  $55  per  M. 

No.  2.  —A.  B.  Ryder,  S  lbs.  beef  roast  at  idj-';  12  S.  F.  eggs,  zS,^ ;  \  brl.  G.  flour  at 
S5.50;   10  lbs.  lard  at  12.]^;  \  bu.  beans  at  S3. 20. 

No.  3.  — W'm.  Harper,  i  qr.  lamb,  16  lbs.,  at  15^;  10  lbs.  lard  at  12.U';  6  lemons,  15''; 
12  -S.  V.  eggs,  25^;  2  lbs.  cheese  at  16^;   i  sack  buckwheat  flour,  S1.25. 

No.  4.  —  Mrs.  Wm.  Hanson,  5  lbs.  iamb  chops  at  16^;  18  lbs.  ham  at  11^;  8  lbs.  round 
steak  at  14^- ;  i  case  C.  tomatoes,  36  cans,  at  8?;  i  case  C.  corn,  36  cans,  at  8  / ;  i  brl.  G. 
flour,  S5.25;   I  lb.  pejjper,  65^;   i  lb.  ginger,  60^. 

No.  5.  —  Edward  Austin,  2  lbs.  halibut  at  20^;  6  lbs.  sir.  roast  at  \6^ \  20  lbs.  G.  sugar 
at  6.','';    12  S.  F.  eggs,  28^;    i  brl.  apples,  S2.75;    i  bottle  T.  ketchup,  24^;    i  lamp,  40^. 

No  6. — Thomas  H.  Tucker,  i  tub  butter,  42^  lbs.,  at  22^;  i  cheese,  28.',  lbs.,  at  I2i^; 
I  case  C.  tomatoes,  36  cans,  at  8  ^ ;  i  case  C.  corn,  36  cans,  at  8f^;  i  case  C.  peas,  36  cans, 
at  12.]^;  22.]  lbs.  fresh  fish  at  12^;  26.]  lbs.  chicken  at  14^;   18  lbs.  sirloin  steak  at  15^; 

24  lbs.  sirloin  roast  at  15^. 

No.  7. — J.  B.  Longley,  i  brl.  X.  S.  flour,  S5.75  :  1  brl.  pastry  flour,  $6;  32^  lbs.  turkey 
at  15^;  21  lbs.  lobster  at  16^;  5  gals,  oysters  at  S1.20;  15  lbs.  codfish  at  \2\^ ;  i  brl.  G. 
sugar,  231  lbs.,  at  6^. 

No.  8.  —  Chas.  A.  Dodge,  6\  lbs.  veal  roast  at  \6'r  ;  12  lbs.  G.  sugar  at  6.]  << ;  12  S.  F. 
eggs.  28^;    I  b.\.  dried  peaches,  10  lbs.,  at  15^;   |  gr.  matches,  25^. 

No.  9.       Mrs.  A.  Waldron,  q.\   lbs.  turkey  at   16^;    10  lbs.  lard  at   12,',^;    i  gal.  vinegar, 

25  P;    1  lb.  K.  B.  tea,  60'^;    i  qt.  pickles,  is?';  2  lbs.  raisins  at  15^. 

No.  10.  —  P.  J.  McGuire,  i  tub  butter,  43.]  lbs.,  at  22^;  i  tub  lard,  48  lbs.,  at  11/  ;  22i 
lbs.  rib  roast  at  14^;  11.^  lbs.  pork  roast  at  10^;  8  lbs.  sirloin  steak  at  i  5  4^ ;  i  case  eggs, 
30  doz.,  at  20^;    I  doz.  C.  tomatoes,  $  i. 

No.  11.  —  E.  B.  Woods,  7.]  lbs.  chicken  at  isf;  15  lbs.  tub  butter  at  22'';  3  lbs.  raisins 
at  \$^  \   2  lbs.  citron  at  20^  ;  2  lbs.  dried  currants  at  12.]  ^  ;  8  lbs.  beef  at  8;^. 

No.  12.  —  Mrs.  F.  Gilford,  4^  lbs.  chicken  at  15^;  i  .sack  buckwheat  flour,  S1.25  ;  i  gal. 
M.  sirup,  S1.25  ;  5  lbs.  lard  at  12.]^;  i  b.\.  dried  apricots,  5  lbs.,  at  20J!';  2  pkgs.  shredded 
wheat,  25^. 

Cash  sales  for  the  day,  per  cash  tickets,  S  362.28. 

Received  cash  as  follows :  E.  B.  Woods,  balance  of  October  account ;  Mrs.  A.  Waldron, 
on  account,  S20;  E.  L.  Corey,  to  balance  October  account;  C.  A.  Dodge,  to  balance  October 
account;  James  B.  Longley,  on  account,  $25. 

Had  C.  H.  Stratton's  note  of  Oct.  15  discounted  at  the  City  Bank,  and  net  proceeds 
placed  to  credit.      Face  of  note,  S212.40;  interest,  4  mos.,  $4.25  ;  discount,  92  ds.,  S3. 32. 

Deposited,  S400. 

Paid  cash  as  follows:  (Checks)  Adams  &  Hackland,  on  account,  S2C)0;  E.  J.  Dunn 
Grocery  Co.,  invoice  of  Nov.  i,  less  5  %  (deduct  S37. 50,  amount  of  goods  returned);  note  in 
favor  of  S.  S.  Pierce  &  Co.,  due  Nov.  14,  with  interest;  face  of  note,  S 458. 95;  interest, 
S1.53  ;  Armour  &  Co.,  invoice  of  Nov.  8,  less  2%  ;  American  Sugar  Refining  Co.,  invoice 
of  Nov.  8,  less  i  %;  insuring  stock  of  groceries  and  fi.vtures  one  year  from  date;  policy, 
S3500;  premium,  1%.  (Currency)  purchases  from  market  wagons,  S63. 42  ;  shoeing  horse, 
Si.25;  board  of  horses,  S  10;  salaries,  Canfield,  S  12  ;  Stuart,  S  12;  Holt,  S  15;  Carter,  Si 5; 
telegrams  and  telephone  service,  S1.87;  freight,  Si7-42. 

J.  M.  Marsh  drew  cash  for  private  use,  S60.     (Student)  drew  cash  for  ])rivate  use,  S  50. 


RETAIL   GROCERY    BUSINESS  175 

Received  of  P.  J.  McGuire  his  note  at  90  ds.,  with  interest,  to  balance  October  account. 
Accepted  Cobb,  Bates  &  Yerxa's  draft  at  30  ds.  for  the  amount  of  their  invcjice  received 
this  day. 

November  23,   19 — 

Bought  of  Gray  Bros.,  City,  60  ds.,  3  10,  92  lbs.  turkey  at  14,'' ;  56  lbs.  chicken  at  I2.1^; 
60  doz.  S.  F.  eggs  at  22, <^. 

Bought  of  Armour  &  Co.,  Chicago,  net  30,  2  '10,  invoice  amounting  to  $  112.20. 
Purchased  of  Swift  &  Co.,  Chicago,  net  60,  3/10,  invoice  amounting  to  $  168.30. 
Purchased  of  M.  S.  Newton  &  Sons,  Boston,  net  30,  2    10,  invoice  amounting  to  $34.62. 
Bought  merchandise  from  market  wagons,  for  cash,  amounting  to  $46.28. 
The  following  sales  slips  have  been  handed  in  by  the  salesmen. 

No.  1.  —  ;\Irs.  A.  W'aldron,  2  lbs.  sirloin  at  16  f;  gl  lbs.  rib  roast  at  14^;  i  5  lbs.  G.  sugar 
at  6.!«^;    i  bx.  dried  peaches,  10  lbs.,  at  12^';    i  can  peas,  15^';    i  bu.  potatoes,  6o!^. 

No.  2.  —  P.  J.  McGuire,  2  brls.  Baldwin  apples  at  $2.50;  10  bu.  E.  R.  potatoes  at  55^; 
24  doz.  case  eggs  at  18^;  20  hds.  cabbage  at  8^;  42  lbs.  beef,  sirloin,  at  15^;  18  lbs.  fresh 
fish  at  I2t';    I  brl.  N.  S.  flour,  $5.50. 

No.  3.  —  Mrs.  S.  T.  Worthen,  20  lbs.  G.  sugar  ai  e)J\  10  lbs.  lard  at  \2\f  \  12  S.  F. 
eggs,  28 f';  I  brl.  apples,  S2.75  ;  .]  brl.  pastry  flour  at  ^6;  6|-  lbs.  sirloin  roast  at  16P;  i  bot- 
tle bluing,  10^;   I  bx.  stove  polish,  12^. 

No.  4. — A.  B.  Ryder,  i  bx.  dried  peaches,  to  lbs.,  at  12^;  12  S.  F.  eggs,  28,^;  15  lbs. 
G.  sugar  at  6\'r  \  9.]  lbs.  turkey  at  16^;    i   bx.  poultry  dressing,  2^i \    i  qt.  oysters,  351^. 

No.  5.  —  C.  H.  Stratton,  2  brls.  N.  S.  flour  at  S5.50;  i  brl.  pastry  flour,  $5.75;  2  brls. 
apples  at  $2.50;  i  bx.  oranges,  $4.25  ;  16  lbs.  sirloin  steak  at  15^;  24  lbs.  sirloin  roast  at 
14^;    18  doz.  S.  Y.  eggs  at  25^;    i  bu.  beans,  $3. 

No.  6.  —  Mrs.  Wm.  Hanson,  2  pkgs.  rolled  oats,  25^;  5  doz.  case  eggs  at  22.^';  25  lbs. 
G.  sugar  at  6.]-^;  12  lbs.  rib  roast  at  14^;  i  5-lb.  can  Java  coffee,  $1.50;  i  can  E.  B.  tea, 
10  lbs.,  at  50!^. 

No.  7.  —  Wm.  Harper,  9  lbs.  chicken  at  15^;  4  lbs.  salt  pork  at  10^;  12  S.  F.  eggs,  28^; 
12  oranges,  35^;    i  lb.  F..  B.  tea,  60'*;    15  lbs.  G.  sugar  at  6.]^. 

No.  8.  —  E.  L.  Corey,  2  lbs.  sirloin  steak  at  16^;  5I  lbs.  veal  roast  at  18^;  i  bx.  dried 
prunes.  10  lbs.,  at  i  5  <^ ;    1  brl.  apples,  $2.75;    i  lb.  chocolate,  40^. 

No.  9.  — T.  B.  Tucker,  25  doz.  S.  F.  eggs  at  24'' ;  20  bu.  E.  R.  potatoes  at  50?  :  40  hds. 
lettuce  at  2^;  i  case  Cream  of  Wheat,  36  pkgs.,  at  \2\'f  ;  42.^  lbs.  beef,  sirloin,  at  15^; 
I  hf.  cht.  E.  B.  tea,  50  lbs.,  at  60/;    i  mat  Java  coffee,  75  lbs.,  at  28^. 

No.  10. — James  B.  Longley,  i  mat  Rio  coffee,  75  lbs.,  at  15^;  i  hf.  cht.  Jajjan  tea, 
50  lbs.,  at  35^;  2  gal.  oysters  at  $1.25;  i  tub  butter,  40.]  lbs.,  at  22^;  28  lbs.  fresh  fish  at 
13'*;    12  doz.  case  eggs  at  18^. 

No.  11.  —  E.  B.  Woods,  I  qt.  oysters,  40^;  6  lbs.  pork  loin  at  \2\i \  10  lbs.  lard  at 
12A'':    I  lamp,  65^;    I  lb.  chocolate,  40,^;    i  lb.  baking  powder,  50^. 

No.  12.  —  Edward  Austin,  8]  lbs.  corned  beef  at  12^;  i  hd.  cabbage,  10^;  5  gals.  K.  oil 
at  13^;    12  S.  F.  eggs,  28;^;    12  oranges,  35 (^;   i  5-lb.  can  Java  coffee,  $1.50. 

Cash  sales  for  the  day,  per  cash  tickets,  S422.16. 

Received  cash  as  follows  :  Mrs.  S.  T.  Worthen,  balance  of  October  account;  Mrs.  Wm. 
Hanson,  $25,  to  apply  on  account;  Wm.  Harper,  to  balance  October  account;  E.  Austin, 
to  balance  October  account;  T.  B.  Tucker,  $50,  to  apply  on  account. 

Discounted  at  the  City   Bank   G.    .M.    Kelly's  note,   dated  Sept.    19,  at  4  months,   with 


ITi",  MODEKN    lUaSTKATlVE   BCMJKKEEPINt; 

interest.  Face  of  note,  S622.85  ;  interest,  S  12.46;  discount,  S6.14;  net  jiroceeds  placed 
to  credit. 

Deposited  S400. 

Paid  cash  as  follows:  (Checks)  Hackett  Bros.,  invoice  of  Nov.  8,  less  2%;  S.  M. 
Crockett  &  Co.,  invoice  of  Nov.  8,  less  3  %  ;  Swift  &  Co.,  invoice  of  Nov.  8,  less  i  %. 
(Currency)  board  of  horses,  Sio;  railroad  mileage  ticket,  500  miles,  Sio;  salaries, 
Canfield,  S12;  Stuart,  S12;  Holt,  S15;  Carter,  $15;  freight,  S1.45;  purchases  from 
market  wagons,  S46.28. 

Gave  S.  S.  Pierce  &  Co.  our  note  at  60  ds.,  with  interest,  to  pay  invoices  of  Oct.  29  and 
Nov.  15,  less  3  %. 

November  29,   19 — 

Purchased  of  Cobb,  Bates  &  Ver.xa,  acceptance  30  ds.,  merchandise  invoiced  at  S  182.77. 
Bought  of  Armour  &  Co.,  Chicago,  net  30,  2   10,  invoice  amounting  to  S  83.49. 
Purchased  of  Swift  &  Co.,  Chicago,  net  30,  2    10,  invoice  amounting  to  S87.96. 
Bought  of  M.  S.  Newton  &  Sons,  Boston,  net  30,  2-  10,  merchandise  invoiced  at  S28.42. 
Bought  of  S.  S.  Pierce  &  Co.,  Boston,  net  60,  3    ro,  invoice  amounting  to  S63.14. 
Purchased  produce  from  market  wagons,  for  cash,  S62.46. 
The  following  sales  slips  have  been  handed  in  by  the  salesmen. 

No.  1.  —  Mr.  S.  T.  Wortiieii,  2.1  lbs.  sirloin  steak  at  16^;  I  lb.  Ceylon  tea,  So^; 
12  oranges,  35^';    i  broom,  30^;   2  lbs.  raisins  at  15^. 

No.  2.  —  A.  B.  RydL-r,  i  b.\.  cigars,  S5.50;  i  brl.  pastry  flour,  $6;  12  oranges,  35^; 
8,1  lbs.  lamb  roast  at  i6t';    15  lbs.  G.  sugar  at  6.]  ^  ;    12  S.  F.  eggs,  28^. 

No.  3. — C.  H.  -Stratton,  42^  lbs.  butter  at  24^;  64  lbs.  turkey  at  15^;  2  gals,  oysters  at 
$1.20;  1  brl.  G.  sugar,  217  lbs.,  at  6^ ;  i  case  Ceylon  tea,  50  lbs.,  at  52^;  22  doz.  S.  F. 
eggs  at  26^. 

No.  4.  —  F.dward  Austin,  9.I  lbs.  turkey  at  i6f^;  \  brl.  pastry  flour  at  S6;  12  bananas, 
25  P;    I  pkg.  gelatine,  15^^;    i  bx.  honey,  225^. 

No.  5. —  F.  L.  Corey,  12J  lbs.  turkey  at  16^;  i  qt.  oysters.  35^ ;  i  bx.  cigars,  S3. 50; 
I  can  peas,  1 5 1' ;  i  gr.  matches,  25^;  6  lbs.  loaf  sugar  at  8^. 

No.  6.  P.  J.  McGuire,  200  cigars  at  $55  per  M.;  500  cigars  at  S35  per  M. ;  42  lbs. 
lamb  at  I2f';  i  brl.  G.  sugar,  231  lbs.,  at  6^^';  22  lbs.  beef,  sirloin,  at  15)'';  1  mat  Java 
coffee,  75  lbs.,  at  28.*^. 

No.  7.  —  Mrs.  A.  Waldron,  i  brl.  pastry  flour,  S6;  20  lbs.  tub  butter  at  25^;  6.]  lbs. 
veal  roast  at  18^;    i  can  peas,  15^;   .1  lb.  pepper  at  80^;   2  pkgs.  shredded  wheat,  25^. 

No.  8.  —  Mrs.  Fred  Gilford,  8.]  lbs.  sirloin  roast  at  16^;  i  brl.  pastry  flour,  S6;  4  lbs. 
dried  peaches  at  I2f';    12  S.  F.  eggs,  28,'';    i  can  peas,  15,*^. 

No.  9.  —  Chas.  A.  Dodge,  .1  brl.  pastry  flour  at  $6;  S.l  lbs.  sirloin  roast  at  16^;  i  lb. 
cocoa,  40*';  I  s-lb.  can  Java  coffee,  Si-5o;  i  qt.  pickles,  15^;  2  lbs.  cheese  at  i6f ;  5  lbs. 
print  butter  at  30^. 

No.  10. — ^T.  B.  Tucker,  i  hf.  cht.  E.  B.  tea,  60  lbs.,  at  50,^*;  i  gal.  Olive  oil,  $2.50; 
22  lbs.  fresh  fish  at  12P;  48  lbs.  beef,  sirloin,  at  I5<';  i  doz.  T.  ketchup,  S2;  i  brl.  G. 
sugar,  226  lbs.,  at  6<^ ;  10  bu.  E.  R.  potatoes  at  55  ,<^;  i  brl.  pastry  flour,  S6;  103  lbs.  winter 
squash  at  2^. 

No.  11. — James  B.  Longley,  26  lbs.  lobster  at  i6«';  3  gals,  oysters  at  S  1.25;  500  oysters. 
New  York  count,  at  60^  per  C;  52  lbs.  turkey  at  15^;  i  gal.  Olive  oil,  S2.50;  22  lbs. 
sirloin  steak  at  15/. 


RETAIL   GROCERY   BUSINESS 


177 


No.  12.  —  Mrs.  Win.  Hanson,  i  brl.  N.  S.  flour,  >S5.75;  4  doz.  case  eggs  at  20^;  23^ 
lbs.  turkey  at  iS  f  ',  9^  '^^-  ^resh  fish  at  12  >-' ;  i  case  corn,  ^6  cans,  at  S" '' ;  i  case  tomatoes, 
36  cans,  at  8  ^. 

Cash  sales  for  the  day,  per  cash  tickets,  $436  98. 

Received  cash  as  follows:  Mrs.  A.  Waldron,  to  balance  October  account;  Mrs.  W'm. 
Hanson,  to  balance  October  account ;  J.  R.  Longley,  on  account,  S25. 

Sold  one  of  the  horses  on  account  of  being  too  light  for  the  service,  for  S90. 

Had  C.  H.  Stratton's  note  of  the  8th  inst.  discounted.  Face  of  note,  $268.75;  discount, 
$1.75  ;  net  proceeds  placed  to  credit. 

Deposited  $350. 

Paid  cash  as  follows:  (Checks)  Adams  &  Hackland,  on  account,  $200;  Cavanaugh 
Bros.,  for  bay  horse  to  replace  the  one  sold  this  day,  $  125  ;  M.  S.  Newton  &  Sons,  bills  of 
Nov.  S  and  Nov.  15,  less  i  %  ;  Armour  &  Co.,  invoice  of  Nov.  15,  less  2  %  ;  Swift  &  Co., 
bill  of  Nov.  15,  less  3%.  (Currency)  purchases  from  market  wagons,  $62.46;  freight, 
^4.27;  board  of  horses,  Sio;  shoeing  horse,  $[.25;  salaries,  Canfield,  $12;  Stuart,  S12; 
Carter,  $15;   Holt,  $  15. 

J.  M.  Marsh  drew  cash  for  private  use,  $25.     (Student)  drew  cash  for  |:)rivate  use,  $25. 

Balance,  foot,  and  rule  your  cash  book,  including  the  Mdse.  Disct.  column,  and  foot  and 
rule  your  purchase  book  and  sales  book. 

Following  is  a  model  form  for  the  closing  of  the  credit  side  of  your  cash  book. 


30 


Mdse.  Disct. 


Balance 


ott  hand 


98 

231 

76 

1461 

1 

13_ 
92 


Posting.  - —  First.  —  Post  from  your  statement  sheets,  from  the  debit  side  of  the  cash  book, 
and  from  the  journal  to  the  card  ledger,  as  in  October. 

Second.  —  Post  the  footing  of  the  Amount  of  Invoice  column  of  the  purchase  book  to 
the  debit  side  of  Merchandise  account  in  your  general  ledger,  and  post  each  separate 
invoice,  except  cash  items,  to  the  credit  of  the  proper  account  in  the  general  ledger. 

Third.  —  Post  the  amount  in  the  Monthly  Sales  column  of  the  abstract  sales  book  to  the 
credit  side  of  Merchandise  account  in  your  general  ledger. 

Fourth.  —  Post  the  amount  of  the  Merchandise  Discount  column,  on  the  credit  side  of 
the  cash  book,  to  the  credit  of  Merchandise  Discount  in  the  general  ledger.  Post  each  item 
in  this  column  to  the  debit  of  the  person  or  firm  allowing  the  discount. 

Post  the  other  cash  entries  as  heretofore  in  double-entry. 

Fifth.  —  Post  the  journal  as  in  all  double-entry  sets. 

The  inventory  of  unsold  merchandise  amounts  to  $4595.21.  Horses,  wagon,  and 
harnesses  are  valued  at  $500;  furniture  and  fixtures  valued  at  $112.50;  unexpired 
insurance,  S  32.08. 

Take  an  abstract  of  the  customers'  ledger  and  a  trial  balance.  Include  in  the  trial  bal- 
ance the  amount  due  from  customers,  as  shown  by  the  abstract,  and  the  amount  of  cash  on 
hand  as  shown  by  the  cash  book. 

Make  a  statement  of  losses  and  gains  (see  form,  page  178),  and  a  statement  of  resources 
and  liabilities  (see  form,  page  178).     Close  the  general  ledger. 

Hand  your  books  and  vouchers  to  the  teacher  for  inspection. 


17X 


MODKRN    II.l.USTKATIVK    ]!( KJKKKKPING 


Statement  of  Losses  and  Gains 
White  &  Marsh,  November  30,   19 — 


Sales  for  month 

Inventory,  November  i,  19 — 

Purchases  for  month 

Deduct:  Inventory,  November  30,  19 — 
Turnover  for  November  • 
Gain  from  Sales 
Add  : 

Merchandise  Discount,  allowed  us 
Interest,  on  notes  receivable 
Gross  gain  from  tlio  business 
Deduct : 

Expense 

Less  unexpired  insurance 
Salaries,  for  month 
Discount,  allowed  others 
Kreight.  for  month 
Depreciation  of  horses  and  wagons 

••  furniture  and  fixtures 
Net  gain 

A.  U.  White,  \  net  gain 
C.  D.  .Marsh.  ',    "      " 


*  Cost  of  goods  sold.     Sec  page  216. 


87.29 
32-08 


Statement  of  Resources  and  Liabilities 
White  &  Marsh,  November  30,   iq — 


Rksoukces 

Cash,  on  hand  and  in  bank 

984  '  06 

Notes  Receivable,  debit  balance 

215    98 

Accounts  Receivable,  per  card  ledger 

I  236  ;  69 

1 

Mdse.,  on  hand 

3005     65 

Insurance,  unexpired 

32I08 

1 

Horses  and  Wagons,  valued  at 

450 

Furniture  and  Fixtures,  valued  at 

LlAHILITlES 

125 

6049 

46 

Notes  Pavable.  credit  balance 

529 

25 

■   Account  Payable,  per  general  ledger 

Present  worth 

798 

75 

.328 

1 

4721 

46 

A.  H.  White,  investment 

2742.78 

1 

1 

A  net  gain 

117.95 

2860  '  73 

C.  D.  Marsh,  investment 

2742.78 

J  net  gain 

117.95 

2860 

73 

4721 

46 

1 

. 

RKi'Aii,  i;koceky  businkss  179 

EXERCISES 

Note.  —  The  entries,  statements,  etc.,  called  for  in  these  exercises  should  be  made  on  loose  journal  piper. 

1.  Determine  the  percentaf^e  of  loss  for  the  month  of  October  on  the  capital  invested. 
The  percentage  on  capital  invested  is  found  hy  comparing  the  net  gain  with  the  net  ca|)ital. 

2.  Determine  the  percentage  of  gross  gain  from  sales  in  the  month  of  NoNcniher  a.s 
shovvia  by  your  statement  of  losses  and  gains. 

The  percentage  of  gross  gains  from  sales  is  foinul  by  dividing  the  amount  of  (lie  gross  gain  bv  the  amount 
of  the  sales;  and  the  percentage  of  net  gain  is  found  by  dividing  the  amount  of  the  net  gain  bv  tlie  amount  of 
the  sales. 

3.  Determine  the  percentage  of  net  gain  for  November,  as  shown  by  your  statement  of 
losses  and  gains. 

4.  Determine  the  percentage  of  net  gain  for  November  on  the  capital  invested,  as  shown 
by  your  statement  of  resources  and  liabilities. 

5.  Determine  the  percentage  of  e.\i)ense  for  running  the  business  for  the  month  of 
November,  as  shown  by  your  statement  of  losses  and  gains. 

6.  H.  C.  Bo  wen  has  been  conducting  a  retail  dry  goods  business  and  keeping  his  books 
by  single-entry.  His  present  worth  at  the  beginning  of  the  year,  as  shown  by  his  books,  was 
$5826.13,  and  his  ])resent  resources  and  liabilities  at  the  end  of  the  year  are  as  follows: 

Resources:  Merchandise  inventory,  S4783.24;  Furniture  and  fixtures,  $450;  Motor 
delivery  wagon,  S  1500  ;  Cash  as  per  cash  register,  $36.46  ;  Cash  in  bank  as  per  check  book, 
$1242.81;  Accounts  receivable  as  per  customers'  ledger,  $375.52;  Unexpired  insurance, 
$39.25. 

Liabilities:  Accounts  payable  as  per  impaid  bills,  $1275;  Note  payable  as  per  bill 
book,  $300. 

Determine  (i)  Bowen's  present  worth  ;  (2)  the  net  gain  or  net  loss  for  the  year;  (3)  the 
percentage  of  gain  or  loss  for  the  year  on  the  capital  investment. 

7.  Show  the  journal  entry  you  would  make  if  you  were  emplo)ed  by  Mr.  Bowen  to 
change  his  books  from  single-entry  to  double-entry,  and  explain  the  steps  you  would  take 
in  making  the  change. 

8.  T.  H.  O'Meara  is  doing  a  retail  business  and  has  been  keeping  his  books  by  single- 
entry.  He  engages  you  as  bookkeeper  and  instructs  you  to  open  and  keep  a  set  of  double- 
entry  books.  Suppose,  after  you  have  opened  the  new  books,  you  should  discover  that 
Jones  &  Co.  hold  Mr.  O'Meara's  note  for  $250,  ar.d  that  it  had  not  been  included  in  the  list 
of  resources  and  liabilities.  Show  the  entry  or  entries  that  would  be  made  for  this  item,  to 
correct  the  omission. 

9.  You  have  changed  a  set  of  books  from  single-entry  to  double-entry,  and  the  pro- 
prietor's investment  account  shows  his  present  worth  to  be  $7836.51.  Suppose  a  customer's 
account,  amounting  to  $28.75,  which  the  proprietor  had  considered  worthless,  and  which 
was  not  included  in  the  new  books,  is  paid  in  full  in  cash.  Show  the  entry  or  entries  you 
would  make  for  this  item. 

10.  J.  M.  Irwin  is  conducting  a  retail  grocerv  and  meat  business  in  two  adjoining 
stores.  T.  A.  Coleman,  desiring  to  purchase  a  going  business,  offers  Irwin  S3500  cash  for 
the  good  will,  stock  in  trade,  and  fixtures  of  the  grocery  part  of  the  business,  and  the  lease 
rights  of  the  grocery  store.  Assume  that  Mr.  Irwin  has  accepted  the  proposition,  that  a 
bill  of  sale  has  been  executed,  and  that  the  cash  has  been  paid.  All  bills  for  the  grocery 
stock  have  been  paid  by  Irwin,  and  he  will  collect  all  bills  due  him  for  groceries. 


18U  Modern  iLi.usTii.\TivE  iiookkeeping 

If  the  books  are  kept  by  single-entr)-,  show  the  entry  or  entries  on  Irwin's  books  for  the 
above  transaction.     Show  the  same  on  Coleman's  books. 

11.  Assume  that  Coleman  will  keep  his  books  by  double-entry.  Show  the  proper  entry 
or  entries  for  the  transaction  in  lO,  estimating  the  good  will  at  S500,  the  fixtures  at  S300, 
and  the  stock  of  groceries  at  S2700. 

12.  Eden  &  Kline  are  conducting  a  retail  business,  and  their  books  on  Dec.  31,  19 — , 
showed  that  their  sales  lor  the  year  were  S  12687.92;  their  purchase,  $9454-45  ;  and  stock 
on  hand  at  beginning  of  year,  S 7675.86.  The  following  accounts  showed  debit  balances: 
Freight,  S64.32;  Salaries,  S  1575  ;  E.xpense,  S254.93  ;  Furniture  and  Fixtures,  $850;  Horses 
and  Wagons,  S425 ;  Notes  Receivable,  S246.39.  An  abstract  of  the  customers'  ledger 
showed  amounts  due,  S2916.57;  cash  on  hand  and  in  bank,  $891.27.  The  following  ac- 
counts showed  credit  balances:  F.  R.  Eden,  S5cxdo;  J.  B.  Kline,  $5000;  Notes  Payable, 
S  1227.46;  Accounts  Payable,  S3 14.39;  Interest,  $6.74;  Mdse.  Discount,  $117.28. 

The  inventories  were  as  follows:  Merchandise,  $7886.25;  Horses  and  Wagons,  $375; 
Furniture  and  Fixtures,  S750;  Insurance,  unexpired,  $54.65;  Interest  accrued  on  notes 
jiayable,  $  1 1.04. 

From  the  above  data  make  a  trial  balance,  a  statement  of  losses  and  gains,  and  a  state- 
ment of  resources  and  liabilities.  Show  the  percentages  of  gross  gain  and  net  gain  from 
the  business,  and  the  ]jercentage  of  net  gain  on  the  capital. 

13.  Assume  that  l-klcn  &  Kline  decided  to  keep  their  books  by  single-entry  after 
Dec.  31,  19 — ,  running  personal  accounts  only,  and  that  the  ledger  has  been  closed  as  of 
that  date.  Show  the  journal  entry  you  would  make  to  change  their  books  from  double-  to 
single-entry,  using  the  data  on  their  statement  of  resources  and  liabilities  (No.  12). 

Since  only  personal  accounts  are  to  be  nin  (kept),  it  will  be  necessan,'  for  you  to  make  such  an  entr^-  as 
will,  when  posted,  close  all  other  accounts.  Make  an  entry  as  if  you  were  going  to  close  all  of  the  accounts, 
then  check  the  personal  accounts  :  the  remaining  items,  when  posted,  would  close  the  impersonal  accounts, 

and  the  ledger  would  then  be  in  single-entry  form. 

14.  Suppose  that  Eden  &  Kline's  business  year  ended  June  30,  instead  of  Dec.  31,  and 
that  they  decided  to  change  their  books  on  the  latter  date,  without  taking  inventories,  or 
determining  the  condition  of  the  business.  Show  the  journal  entry  you  would  make  to 
effect  the  change. 

While  it  is  necessary  to  know  the  actual  resources  and  liabilities  of  the  business  to  change  from  single-  to 
double-entry,  only  the  open  accounts  need  be  considered  in  changing  from  double-  to  single-entry.  A  trial 
balance  should  be  taken  which  will  serve  as  the  basis  of  the  journal  entry. 

The  following  exercises  are  given  for  practice  in  schools  which  have  adding  machines : 

15.  Pro\e  the  abstract  of  your  customers'  ledger  by  listing  (on  the  adding  machine)  the 
November  charges  and  the  November  credits,  and  comparing  the  difference  between  the 
amounts  of  these  two  lists  with  the  footing  of  the  abstract. 

Since  vou  have  no  sales  slips  you  may  use  your  monthly  statements  from  which  to  get  the  data  forlhe  above 
exercise,  and  for  other  exercises  of  a  similar  nature. 

16.  Prove  the  November  charges  and  credits  to  your  customers'  ledger  by  listing  the 
November  sales  slips  and  the  entries  for  customers'  payments  in  your  cash  book,  and  coni- 
l)aring  the  footing  of  the  sales  slips  list  with  that  of  the  ledger  charges  list,  and  the  footiii 
of  the  cash  entries  list  with  that  of  the  ledger  credits  list. 

17.  Determine  from  the  daily  sales  slips  the  number  of  eggs  sold  on  account  in 
October  by  listing  the  quantities  in  units  (single  articles);  the  number  sold  on  account  in 
November;  show  the  quantity  in  dozens  below  the  footing  of  each  list. 


KETAII.   GROCERY    P.L'SIXESS  181 

iS.  Recapitulate  the  daily  sales  and  ]iro\'e  \'oiir  abstract  sales  sheet  for  October  by 
listing  first,  your  charge  sales  for  that  month,  and  show  sub-totals  ;  and  second,  \-our  daily 
cash  sales,  and  show  total  sales  for  each  day. 

19.  Prove  your  daily  charge  postings  to  customers'  accounts  for  November  by  listing 
the  charge  items  to  these  accounts  and  comparing  the  footing  of  each  day's  postings  with 
the  amount  of  the  charge  sales,  or  sub-totals,  for  each  day  on  the  recapitulation  list. 

20.  Prove  your  monthly  statements  for  October  by  listing  your  charge  postings  for  that 
month,  showing  the  amount  of  each  statement  as  a  sub-total,  and  the  total  of  the  statements. 

QUESTIONS 

1.  In  what  respect  docs  a  .single-entry  ledger  difTer  from  the  ledger  of  a  business  in  which  the  books  are 
kept  by  double-entry  ? 

2.  How  would  you  keep  a  record  of  cash  transactions,  and  how  would  you  determine  tlie  amount  of  notes 
receivalile  and  the  amount  of  notes  payable  at  any  st.ited  time  ? 

3.  How  would  you  keep  a  record  of  your  merchandise  .' 

4.  Is  it  possible  to  show  as  complete  a  record  of  the  business  by  single-entry  as  by  double-entry  ? 

5.  What  does  the  single-entrv  iournal  contain  ? 

6.  Describe  the  sales  slip,  and  explain  its  use  in  the  retail  grocery  business.  Why  are  sales  slips  written 
in  duplicate  ? 

7.  Describe  the  method  ot  making  cash  sales  and  of  recording  the  amounts  of  such  sales. 

8.  To  what  books  are  the  cash  sales  of  the  day  carried  ? 

9.  Explain  the  abstract  sales  sheet  and  the  abstract  sales  book. 

10.  Of  what  is  the  purchase  book  an  aljstract,  and  what  will  the  footing  of  its  -Amount  of  Invoice  column 
show  ? 

1 1.  What  will  the  total  footing  ot  the  abstract  sales  book  show  at  any  time  ? 

12.  Where  are  the  items  of  the  sales  slips  carried,  and  when  should  this  be  done  ? 

13.  What  should  the  customers'  monthly  statement  contain,  and  what  should  his  account  in  the  ledger  con- 
tain ? 

14.  \\  hat  advantages  has  the  card  ledger  over  the  ordinary  book  form  of  ledger  ? 

15.  How  should  customers"  statements  be  posted  to  the  card  ledger  ? 

16.  What  is  the  first  step  you  would  take  preparatory  to  changing  a  set  of  books  from  single-  to  double-entry  ? 

17.  What  additional  stejjs  would  vou  take  ? 

18.  How  do  you  obtain  the  necessary  balances  of  the  additional  ledger  accounts  ? 

19.  What  additional  accounts  must  be  opened  in  the  ledger  when  changing  from  single-  to  double-entry  ? 

20.  Suppose  a  resource  or  a  liabilitv  item  liad  been  omitted  in  making  the  statement  ot  resources  and  lia- 
bilities and  was  not  discovered  until  after  the  bonks  had  been  changed  to  double-entry.  How  would  you  correct 
the  omission  ? 

21.  Name  an  account  which  will  always  be  affected  by  the  correction  of  such  an  omission. 

22.  How  would  you  change  a  set  of  books  from  double-entry  to  single-entry  ? 

23.  How  would  you  change  from  double-  to  single-entry  ? 

24.  Which  method  of  bookkeeping  do  vou  jirefer.  single-  or  doulile-entry,  for  an  ordinary  retail  business  ? 

25.  I'nder  what  conditions  would  you  prefer  the  other  method  ? 


COMMISSION,    SHIPPING,    AND    MERCHANDISING    BUSINESS 

A  larfjje  variety  of  jjrocluce  and  manufactured  products  are  shipped  to  trade  centers,  and 
there  sold  to  the  wholesale  and  retail  trades  through  the  medium  of  correspondents  who 
are  known  as  Commission  Merchants. 

A  Commission  Merchant  is  a  person  engaged  in  receiving  and  selling  goods  belonging  tu 
others,  for  a  compensation  called  a  commission,  which  is  generally  a  certain  per  cent  on  the 
sales.  Tlic  property  is  generally  sold  at  the  current  market  rates.  Sometimes  the  shipper 
leaves  the  matter  of  price  and  terms  to  the  judgment  of  the  commission  merchant.  This  is 
generallv  done  in  the  ])roduce  commission  business,  and  in  other  branches  of  the  commission 
business  which  deal  with  perishable  property  ;  but  in  case  of  manufactured  products,  the 
shipi)er  usually  limits  the  price  below  which  the  goods  must  not  be  sold,  and  also  establishes 
the  terms  of  credit. 

Some  commission  merchants  do  both  a  shipping  and  a  commission  business,  and  a  few 
do  a  general  merchandising  business  in  connection  with  the  shipping  and  commission 
business. 

Shipments  and  Consignments.  —  When  property  is  shipped  to  be  sold,  it  is  called  a  "  Ship- 
ment," and  the  party  who  ships  it  is  called  the  "  Consignor."  When  property  is  received  to 
be  sold,  it  is  called  a  "Consignment,"  and  the  party  who  receives  the  property  is  called  the 
"  Consignee."  The  consignor  generally  sends  the  consignee  notice  of  a  shipment  in  the 
form  of  a  letter  of  advice,  or  a  consignment  invoice,  and  a  bill  of  lading. 

Shipments  Account.  — The  .Shipments  account  is  in  its  nature  the  same  as  a  Merchandise 
account,  —  it  is,  in  fact,  an  account  with  the  goods  (merchandi.se)  which  we  have  shipped  to 
others  to  be  sold  on  commission.  The  debit  side  represents  the  total  cost  of  all  goods  shipped, 
and  the  credit  side  shows  the  jiroceeds  of  the  goods  which  have  been  sold  for  us,  and  for 
which  we  have  received  an  account  sales.  When  we  have  received  accounts  sales  fcr  all  goods 
shipped,  the  difference  between  the  debit  and  credit  sides  of  the  Shipments  account  will 
be  either  a  gain  or  a  loss.  If  all  our  shipments  have  not  been  closed  out  and  accounted  for, 
ths  value  of  the  unsold  shipments  is  a  resource  inventory,  and  must  be  added  to  the  credit 
of  Shipments  before  taking  the  difference  between  that  and  the  debit  side  of  the  account. 
This  inventory  is  found  bv  taking  the  total  cost  of  unsold  shipments  as  shown  in  the  ship- 
ment ledger.  This  includes  the  original  cost  of  the  goods  shipped,  as  well  as  any  additional 
cost,  sucli  as  freight,  insurance,  and  drayage.  We  consider  any  un.sold  goods  which  we 
liave  shipped  to  be  sold  on  our  account  and  risk  as  worth  wdiat  we  have  put  into  them. 

Consi?r.  ■  ints  Account. — The  credit  side  of  the  Consignments  account  represents  the 
total  ^  .cs  from  all  consignments,  and  the  debit  side  includes  all  costs,  charges,  and  net  pr 
ceeds,  and  since  the  net  jjroceeds  on  each  consignment  are  determined  by  taking  the  diffei- 
ence  between  the  sum  of  the  costs  and  charges  (including  advances)  and  the  amount  of  the 
sales,   it    aIU   be  seen  that  when  all  consignments  have  been  sold  out  and  accounts  sa' 
rendered,  the  Consignments  account  must  balance. 

IH-2 


SHIPPINT,    AND    COMMISSION'    BUSINESS  183 

If  the  account  has  a  debit  balance,  it  signifies  that  the  costs  and  advances  whicii  have  been 
made  upon  ojien  consignments  are  greater  than  the  sales  from  these  consignments.  In  such 
a  case  the  difference  is  a  resource  or  asset,  since  it  is  the  amount  due  from  the  consignors. 

If  the  Consignments  account  is  larger  on  the  cretlit  side,  it  indicates  that  the  total  of 
the  sales  from  consignments  for  which  you  have  not  rendered  accoLmts  sales  is  greater  than 
the  costs  and  any  advances  which  you  have  made.  This  difference  would  be  due  the  con- 
signors, and  therefore  is  a  liability. 

It  is  clear,  then,  that  if  the  Consignments  account  does  not  balance,  it  will  show  cither  a 
resource  or  a  liability,  and  will  appear  on  one  or  the  other  side  of  the  Statement  of  Resources 
and  Liabilities. 

Although  the  student  will  receive  special  instructions  in  regard  to  the  entries  for  the  vari- 
ous transactions  as  they  occur,  it  will  be  well  for  him  to  bear  in  mind  continually  the  follow- 
ing general  rules,  which  govern  all  entries  for  shipment  and  consignment  accounts. 

Rule  for  Sliiptnents 

Shipments  Accoi/nt  is  debited  for  the  total  cost  of  the  goods  shipped,  and  is  credited  fo7- 
the  net  proceeds. 

liilfi-  for  ('oiisitjiiiiiriifti 

CoNS/GNAfE.VTS  Accoi^NT  is  debited  for  all  costs,  charges,  and  net  proceeds  retnrned  to  the 
consignor,  and  is  credited  for  all  sales. 

Books  Kept.  —  The  books  kept  in  a  shipping  and  commission  business  depend  upon  the 
kind  of  goods  handled  and  the  magnitude  of  the  business.  The  following  set  is  designed  to 
illustrate  a  method  of  bookkeeping  adapted  to  the  requirements  of  the  produce  commission 
business. 

The  books  to  be  kept  in  this  work  are  sales  book,  account  sales  register,  shi]Mnent  ledger, 
cash  book,  invoice  book,  journal,  general  ledger,  and  loose-leaf  consignment  ledger.  The 
forms  of  the  invoice  book  and  the  journal  will  be  the  same  as  those  you  have  kept  in  the 
Introductory  Course.  As  but  few  notes  appear  in  these  transactions,  the  bill  book  will  be 
dispensed  with. 

It  is  the  custom  of  most  commission  houses  to  enter  a  description  of  each  lot  of  goods 
\  received  in  a  book  called  the  receiving  book,  which  is  usually  a  book  about  six  inches  wide 
with  rulings  like  those  of  an  ordinary  daybook.  The  entries  in  this  book  are  made  in  pencil. 
i  and  the  book  is  kept  by  the  clerk  in  the  store  or  warehouse.  The  receiving  book  is  left  in 
the  office  at  the  close  of  the  dav,  or  at  other  convenient  times,  so  that  the  bookkeeper  can 
make  the  necessary  entries  from  it.  Commission  houses  generally  use  two  sets  of  receiving 
books,  so  that  those  which  are  in  use  by  the  receiving  clerk  on  one  day  will  be  in  the  office 
on  the  next. 

An  account  is  opened  with  each  lot  of  goods  under  an  appropriate  name  in  a  book  called 
the  consignment  ledger.  Each  account  contains  on  its  credit  side  all  sales  made  from  the  lot 
of  which  it  is  the  record,  and  on  its  debit  side  all  charges  against  this  lot.  When  the  lot  is 
all  sold,  an  account  sales  is  rendered  to  the  consignor. 

By  the  use  of  the  loose-leaf  consignment  ledger,  a  description  of  which  follows,  the 
receiving  book,  consignment  ledger,  and  account  sales  are  combined  in  one,  and  the  book- 
keeping is  greatly  simplified. 

Each  consignment  should  be  accompanied  by  a  letter  of  advice,  containing  the  list  of 
goods,  and  this  letter  should  be  compared  with  the  goods  when  they  are  received,  and  if 


1S4 


MfiDERX   ILLUSTRATIVE   BCMDKKEEriNG 


LoosE-LKAF  Consignment  LEiHiEK 


*LC    or    MCRCHANDISC    FOR    ACCOUNT    OF  (/^^       ^//l^  ' 


i=^U- 


yPZ^-/ 


J^^:A/r.-,^ 


°'  E.  H.  Reed  &.  Company, 


COMMISSION    MERCHANTS. 


lYAvr  pU£«  b«rF ) 


V?-^:*/,  /^^^a;^,  ^-2Si,<<^:?^ii,ZS^ 


'*y 


'' /  e'-^ti-c.J^r:i^  /, 


^ 

2-<^ 

J-(? 


,  0^'a^  /a.  iT 


.2.-».^i^  iJ'*' 


^^^  --P-^  ^.i' 


iC^ 


there  is  any  shortage,  the  consignor  should  be  notified  at  once.  The  receiving  clerk  gener- 
ally enters  the  goods  on  a  blotter  as  they  are  unloaded  from  the  trucks,  and  from  the  blotter 
the  bookkeeper  transfers  the  items  to  a  loose  leaf  of  the  consignment  ledger.  (See  model, 
above.) 

Wlicii  \\  consignment  is  received,  the  lot  number  given  it  is  stenciled  or  marked  upon  each  package,  if  tl>e 
package  is  not  already  so  marked,  and  the  goods  are  thereafter  known,  while  in  the  store  or  warehouse,  and 
when  sales  are  made  from  them,  by  that  number.  Goods  whiclt  are  not  in  pack.iges.  and  which  are  of  such  a 
nature  that  a  lot  number  cannot  conveniently  be  put  upon  them,  are  placed  in  stalls  or  apart  from  other  goc"  , 
and  a  placard  bearing  the  lot  number  is  posted  up  over  them.  .-V  knowledge  of  the  sources  from  which  t 
commission  merchant  obtains  his  consigned  goods  is  valuable  to  him.  and  he  desires  to  conceal  it  from  his  com- 
petitors and  customers.  It  is  jwrtly  for  this  reason  that  he  uses  lot  numbers  or  arbitrary  marks  to  identify  the 
goods  while  they  are  in  his  store  or  warehouse. 

The  Consignment  Ledger.  —  In  this  business,  when  goods  are  received  to  be  sold  on  com- 
mission, the  consignment  will  be  entered  on  a  loose  leaf  of  the  consignment  ledger,  as 
shown  in  the  illustration  on  this  page.  The  consignment  ledger  is  an  underlying  or  au.xil- 
iary  ledger ;  also  called  sectional  ledger. 

In  the  small  square  at  the  upper  right-hand  corner  of  this  loose  leaf   is   written    the 


SHIPPING    AND    COMMISSION    BUSINESS  185 

Stencil,  or  private  mark,  of  this  consignment,  and  every  package  in  the  consignment  will 
be  marked  with  the  same  stencil.  These  stencil  marks  are  arbitrary,  and  any  letter,  num- 
ber, or  symbol  may  be  used.  In  this  business  the  initial  letter  of  the  consignor  and  the 
number  of  his  consignment  will  be  used  as  a  stencil  mark.  The  loose  leaf  is  now  fastened 
to  its  cover  and  becomes  a  part  of  the  consignment  ledger.  The  amount  of  freight  as 
shown  by  the  freight  bill,  which  will  accompany  the  goods,  should  be  entered  in  the  left- 
hand  or  debit  column  of  the  loose  leaf  opposite  Freight.  This  may  be  done  at  the  time  the 
goods  are  received,  or  later,  when  the  amount  is  taken  from  the  cash  book.  As  the  goods 
are  sold,  the  items  are  entered  in  the  space  under  Sales  on  the  loose  leaf,  and  the  amounts 
carried  to  the  right-hand  or  credit  column.  These  amounts  should  be  taken  from  the  sales 
book,  where  they  will  be  found  in  the  special  column  for  sales  from  consignments.  The 
contents  of  this  column  should  be  carried  to  the  consignment  ledger  at  the  close  of  each 
day. 

When  all  the  goods  which  make  up  the  consignment  have  been  sold,  the  right-hand  or 
credit  column  is  footed  and  the  amount  placed  at  the  bottom  of  the  loose  leaf. 

If  any  sight  drafts  have  been  paid  or  time  drafts  accepted  on  account  of  this  consign- 
ment, the  amount  should  be  placed  opposite  Advances  in  the  debit  colunui  of  the  loose 
leaf.  Such  amounts  will  be  found  in  the  consignment  column  on  the  credit  side  of  the 
cash  book.  Everything  in  this  column  should  be  carried  to  the  debit  side  of  the  consign- 
ment ledger  at  the  close  of  each  day.  The  commission  should  now  be  calculated,  and  also 
any  charges  which  may  be  due  for  cartage,  insurance,  storage,  or  other  items  of  e.xpense. 
In  this  business  these  items,  ex'cept  commission,  will  be  combined  under  the  head  of 
"  Charges."  Enter  the  amount  of  commission  and  of  charges  in  the  left-hand  or  debit 
column  of  the  loose  leaf.  The  difference  between  the  footing  of  the  right-hand  column 
and  the  sum  of  the  items  in  the  left-hand  column  of  the  loose  leaf  will  show  the  net  pro- 
ceeds or  amount  due  the  consignor,  and  will,  of  course,  balance  the  two  columns  of  the 
loose  leaf. 

All  writing  upon  the  consignment  ledger  should  be  done  in  copying  ink,  for  the  leaf 
is  now  removed  from  the  ledger,  and  a  copy  of  it  taken  in  the  impression  account  sales 
book,  the  leaf  itself  being  sent  to  the  consignor  with  a  check  or  draft  for  the  amount  of 
his  net  proceeds,  unless  the  net  proceeds  are  placed  to  his  credit.  In  the  latter  case,  the 
account  sales  should  be  sent  without  the  remittance,  and  after  Xet  proceeds  the  words  Placed 
to  credit  should  be  written.  Ic  is  important  that  a  good  copv  of  the  account  sales  be  taken 
in  the  impression  book,  for  should  any  dispute  arise  this  impression  book  will  be  accepted 
in  court  as  your  book  of  original  entry,  and  many  houses  post  charges,  commission,  and  net 
proceeds  directly  from  this  book  to  their  respective  accounts  in  the  ledger. 

Shipment  Ledger.  —  When  goods  are  sent  to  other  persons  to  be  sold  on  commission,  the 
date  of  shipment  is  written  in  the  shipment  ledger,  with  the  name  and  address  of  the  con- 
signee, and  the  number  of  the  shipment ;  then  follows  a  description  of  the  merchandise 
shipped,  with  the  price,  which,  in  a  regular  shipping  business,  should  be  the  cost  of  the 
goods.  (See  form  of  shipment  ledger,  page  i86.)  The  shipment  ledger  is  an  underlying 
or  au.xiliary  ledger ;  also  called  sectional  ledger. 

In  the  debit  column,  under  Ledger  Accounts,  should  be  written  the  value  of  the  merchan- 
dise as  shown  in  the  Merchandise  column,  and  to  this  column  is  also  posted,  from  the  cash 
book,  all  expenses  incurred  on  account  of  this  shipment. 

When  an  account  sales  of  a  shipment  is  received,  the  shipment  is  credited  for  the  net 


]8rt 


Ml  iDKKN    ll.l.L  SI  K.Vin  K    K'K  iKKEEPING 


Shipment  Ledger 


Im>kx, 
Check, 

AND 

Folio 


Jan.  2,  19- 


3/2 


jM.  Archer.  1 1.       Brooklyn,  N.  Y. 

100  brls.  Apples,  N.  S.,  2.80 

30  tubs  Butter,  i8co  lbs.,       20' 

20  CSS.  Eggs.  S.  F..  480  (loz.,  1 5  '' 

Via  National  Despatch, 


F.  W.  Smith  Com.  Co..  -i,     Boston. 
250  brls.  .Apples,  Baldwin,     2.50 
30  CSS.  Eggs,  S.  F..  720  doz.,  1 5  « 
Via  National  Despatch, 


D.  W.  Parks  &  Co.,  -4.  Pittsburg,  Pa. 
2400  bu.  Potatoes,  35" 

20  brls.  .-Xpples,  Baldwin,    2.45 
\'ia  Interstate  Line. 


Jas.  F.  Brennam.  «i,  New  York. 

50  tubs  Butter.  3050  lbs.  20' 

12  bxs.  Cheese,  1260  lbs.,        1 1  f> 
Via  Interstate  Line, 
Shipments.  Dr. 
.Mdse.,  Cr. 


MnsB. 


280 
360 

■/2 


62s 
108 


912 

49 


3154 


l.EDC.RR    ACCOLNT^ 


Debits 


712 


7J 


610 
138     60 


60 


go 


_7g5_.9g. 


733 


961 
17     so 


748 


978     50 


60 


Credits 


785 


785 


90 


50 


Folio  and 
Explanation 


Date 


C.  4 
Gain 


Jan. 


C.  5 

C.  4 
Loss 


Jan. 


I'- 


proceeds  from  the  ca.sh  book  or  journal,  and  since  this  disposes  of  the  shipment,  the  ledget 
jiart  of  it  is  closed  by  writini;  in  the  usual  way  the  amount  of  gain  or  loss  on  the  smaller  side 
of  the  account,  and  ruling  and  footing.  (Sec  models,  A.  'SI.  Archer  and  D.  W.  Parks  i\ 
Co.,  in  the  above  illustration.) 

When  the  books  are  posted  preparatory  to  the  taking  of  a  trial  balance,  the  total  of  thi 
Merchandise  column  in  the  shipment  ledger  is  carried  to  the  debit  of  Shipments  and  to  tlu 
credit  of  Merchandise  in  the  general  ledger.     (See  form  of  shipment  ledger.) 

The  shipment  ledger  is  a  combined  journal  or  sales  book  and  ledger,  the  portion  to  the 
left  of  the  Ledger  Accounts  columns  partaking  of  the  nature  of  a  journal,  and  the  part  t.' 
the  right  of  the  Mdse.  column  being  the  ledger  proper.  When  a  shipment  is  made  ami 
entered  in  the  Shipment  ledger,  it  is  equivalent  to  debiting  Shipments  and  crediting  Mdse. 
in  the  journal  and  then  posting  the  entries  to  the  ledger.  Each  account  in  the  shipmei  ' 
ledger  is  closed  the  same  as  in  an  ordinary  ledger. 


SHIPPING    AND    COMMISSION    BUSINESS 

Sales   Book. 


18« 


Const. 
Lot  No 

L.  F 

Invoice 

Extension, 

Sales  from 

CoNSiOXMENTl 

Sales  mow 
Wdse- 

-,5-2 

/ 

J- 
// 

■3  c  o 

■Sff 

7-^ 

3  0  C 

.  /  03 
■  za  / 

3-0 
7-^ 

7^ 

Z-i 

9^ 

f 
7^ 

7^ 
z^ 

tG-z 

7  4//' 

ZO 
^7 

7^ 
7^ 

Zo/ 

z^ 

7 '7 

^c; 

^/-JT 

ISSi 


MuUliKN    ll.LL'STRATU'E    UO  >KKi;t:riNG 


Account  Sales 


;TOTAL  SaLE/> 


Jan. 


10 

24 
26 

30 


K   i 
.M-r 

K-2 


J.  M.  Kendall 
E.  M.  Jackson 
C.  D.  Martin 
J.  M.  Kendall 


Rochester.  N.Y. 
lilmira.  N.Y. 
L'tica.  N.Y. 
Rochester,  N.Y. 


-03 
774 
5S2    60 


Cartage 

COKVISSIOX 

Lhakoes 

10 

10 

'5 

'    75 

64    60 

38 

70 

4 

21     40 

29 

•3 

2     50 

7     50 

II 

25 

1  50 

89  23 


9,75 


Sectional  or  Auxiliary  Ledgers  and  Controlling  Accounts.  —  The  student  will  remember 
that  in  arranging  the  accounts  in  the  ledger  in  some  of  his  earlier  work,  he  divided  them 
into  sections,  all  accounts  of  the  same  nature  being  placed  together  in  one  section.  All 
personal  accounts  showing  liabilities  (creditors  of  the  firm)  were  placed  in  one  section,  the 
])ersonal  accounts  showing  resources  (debtors,  or  customers,  of  the  firm)  in  another  section, 
and  all  remaining  accounts  (the  general  accounts  of  the  business)  constituted  the  general 
ledger.  This  principle  of  dividing  the  ledger  into  sections  will  now  be  carried  a  step 
farther  by  making  the  general  ledger  independent  of  the  other  ledgers.  This  is  done  bv 
opening  an  account  in  the  general  ledger  with  each  one  of  the  other  or  sectional  ledgers. 
These  accounts  are  known  as  coiitrolliu;::;  accounts,  and  all  the  debits  and  credits  which  arc 
posted  to  the  sectional  ledgers  from  dav  to  day  are  posted  to  these  controlling  accounts  in 
aggregate  at  the  end  of  the  month.  This  will  enable  the  bookkeeper  to  take  a  trial  balance 
of  the  general  ledger  independently  of  the  sections,  while  the  debits  and  credits  of  each  sec- 
tion must  ecjual  those  shown  on  its  controlling  account  in  the  general  ledger. 

This  method  of  handling  ledgers  is  illustrated  in  this  set  by  placing  all  shipment  accounts 
in  the  shipment  ledger,  all  consignment  accounts  in  the  consignment  ledger,  and  all  the 
remaining  accounts  in  the  general  ledger.  The  accounts  in  the  sectional  ledgers  are  said  to 
underlie  the  controlling  accounts  which  represent  them  in  the  general  ledger.  In  the  general 
ledger  there  will  be  opened  a  Shipments  account,  representing  or  controlling  the  shipment 
ledger,  and  a  Coiisigum.nts  account  representing  or  controlling  the  consignments  ledger. 
Note  that  all  debits  and  credits  of  shipments  and  consignments  when  originally  entered  in 
the  cash  book,  sales  book,  account  sales  register,  and  the  journal  portion  of  the  shipment 
ledger,  are  placed  in  separate  columns  so  that  they  may  be  footed  at  the  end  of  the  month 
and  posted  to  the  Shijjments  and  Consignments  accounts  in  the  general  ledger. 

When  the  trial  balance  is  taken,  the  general  ledger  will  balance  by  itself.  If  it  is  desired, 
an  abstract  may  be  taken  of  the  shipment  and  consignment  ledgers,  and  it  will  be  seen  that, 
if  the  work  is  correct,  the  balance  of  the  shi]5mcnt  ledger  will  agiee  with  the  balance  of  the 
Shipments  account  in  the  general  ledger,  while  the  balance  of  the  consignment  ledger  will  be 
the  same  as  the  balance  of  the  Consignments  account  in  the  general  ledger. 

Sales  Book. — The  sales  book  contains  a  special  column  for  sales  made  from  consign- 
ments, anil  an  Invoice  extension  column,  which  should  contain  the  items  and  the  total  of 
the  bill  given  the  purchaser,  who,  as  a  rule,  does  not  know  whether  the  goods  are  i)urchased 
from  a  consignment  or  from  the  stock  of  the  business.     (See  model,  page  187.) 

When  sales  are  entered  in  the  sales  book,  the  stencil  mark  of  the  consignment  should 


SHiprixt;  Axu  commission  business 


189 


Register 


PACKAGES 
KEruRNED 

Ti.TAL 

Chakc.es 

ADVANLt> 

1 

- 

L.HEt_K    OR 

Dkaft 

Amount  to 
BE  Posted 

L.  F. 

Name  of  AccoifNx 

21 

90 

181 

10 

181 

10 

107 

30 

300 

366 

70 

366    70 

74 

E.  M.  Jackson, 

Cr 

5    D.XS. 

53 

20 

03 
25 

200 

329 
204 

57 
75 

329 

204 

57 
75 

8g    23 

9175 

58 
59 

47 

Commission, 

Charges, 

Consignments, 

Cr 
Cr 

465 

68 

Dr 

be  written  opposite  those  items  which  are  taken  from  consignments,  and  the  amounts  should 
be  placed  in  the  Sales  from  Consignments  column,  as  well  as  in  the  Invoice  Extension 
column.  The  amounts  of  such  items  as  are  sold  from  the  stock  of  the  business  should  be 
placed  in  the  Sales  from  Merchandise  column. 

When  the  sales  book  is  posted,  the  total  of  Sales  from  Consignments  should  be  carried 
to  the  credit  of  Consignments  (controlling  account)  in  the  general  ledger,  and  the  total  of  the 
Merchandise  column  to  the  credit  of  Merchandise  in  the  general  ledger. 

In  this  month's  work  cash  sales  will  not  be  posted  to  the  debit  of  the  person  making  the 
purchase,  as  in  prev'ious  work,  and  then  posted  back  to  his  credit  from  the  cash  book,  but 
such  sales  will  be  checked  off  in  the  sales  book  and  also  in  the  cash  book,  and  not  posted 
to  the  personal  account  from  either  book.  This  method  of  handling  sales  for  cash  is  used 
where  there  is  no  special  desire  to  keep  a  record  of  the  amount  of  business  transacted  with 
each  customer,  and  it  will  be  seen  that  it  saves  a  considerable  amount  of  posting  where  cash 
sales  are  numerous.  (See  E.  M.  Lacy  entries  in  form  of  sales  book  and  form  of  cash  book, 
pages  187  and  190.) 

Account  Sales  Register. — The  account  sales  register  is  kept  for  convenience  in  posting 
ciiminission  and  charges,  and  contains  columns  for  the  date,  stencil  mark  of  the  consign- 
ment, name  and  address  of  the  consignor,  amount  of  gross  sales,  freight,  commission, 
charges,  goods  returned,  total  charges,  advances,  net  proceeds,  cash  remitted,  amount  to 
be  posted,  folio,  name  of  account. 

If  accounts  are  kept  with  insurance,  cartage,  storage,  etc.,  of  course  columns  would  be  added  for  these 
accounts,  as  well  as  for  commission  and  charges.  In  this  month's  work  all  these  accounts  are  included  under 
the  general  head  Charges. 

When  an  account  sales  is  rendered,  the  necessary  information  should  also  be  entered 
in  the  account  sales  register ;  and  at  the  time  of  the  general  posting  before  a  trial  balance  is 
taken,  the  footings  of  Commission  and  Charges  columns  should  be  carried  to  the  Amount 
to  be  posted  column,  and  the  names  Commission  and  C/iargcs  written  in  the  Name  of 
Account  column  opposite  these  atnounts  in  the  account  sales  register.  The  total  ot  Amount 
to  be  Posted  column  should  be  posted  to  the  debit  of  Consignments,  and  the  items 
which  make  up  this  total  posted  in  the  general  ledger  to  the  credit  of  the  accounts  to  which 
they  belong. 

If  an  impression  of  the  loose  leaf  of  the  consignment  ledger  is  taken  when  an  account  sales  is  rendered, 
the  account  sales  register  may  be  dispensed  with,  as  the  commission  charges,  net  proceeds,  and  total  to  con- 
signments may  be  posted  directl)'  from  the  impression  book. 


190 


MODLIiN   ILLfSTR ATIVE   HOf)KKEEriNG 


^^./- 


D«r»-  L>'.j 


SAME   AND   EXPLANATION 


I    ""*" 


Dik  CuiiUL 


J^' 


7 
// 

/■J- 
2i! 


^7 

J/ 


^i^^C^ 


Z-' 


\.-,il!l-C£^  I 


./.../^ 


'^^  c>c2'C-<:i-C 


>^2,^-r-iii^' 


-7-*^*^.' 


7^.> 


^V2 


VJJL 


ie 


V 


I 


Cash  Book.  In  this  set  the  use  of  special  columns  in  the  cash  book  is  illustrated. 
Whenever  there  are  frequent  entries  for  an\-  account,  a  special  column  should  be  set  aside 
for  that  account.  Such  a  column  will  show  all  entries  to  that  account  separately  from  other 
accounts,  and  will  save  labor  in  jiosting,  since  the  footinj;  of  the  column  is  posted  to  that 
account  in  the  ledger  at  the  end  of  the  month,  instead  of  each  separate  item.  In  this 
business,  the  accounts  to  which  there  are  frequent  entries  in  the  cash  book  are  Merchandise 
Discount,  Shipments,  and  Consignments.  Therefore,  special  columns  are  provided  foi 
these  accounts. 

Debit  Side  of  Cash  Book.  —  The  Merchandise  Discount  column  on  the  debit  side  of  thi 
cash  book  will  contain  all  discounts  allowed  by  us  to  others  on  bills  of  merchandise  sold. 
The  actual  amount  of  cash  received  is  entered  in  the  General  column.  The  Shipments 
column  contains  all  amounts  of  cash  received  from  shijiments.  The  General  column 
contains  also  all  cash  received  from  the  ordinary  accounts  of   the  business. 

In  posting  from  the  debit  side  of  the  cash  book,  all  amounts  in  the  General  column  aro 
posted  in  the  regular  way,  with  the  e.xception  of  amounts  representing  cash  sales,  which  are 


SIIirriXG    ANT)    CfiMMISslON    I'.L'SIXKSS 


V.  i 


^.-^..J, 


r'^^^v-fz^ 


••■AME    A\[>    EXPLANATION 


/^ 


7 


/J 

23 


-^ 


i-^.^^a.^ 


->-z^ 


■y/. 


'it-22ii<i<'=-4ii-si 


>^-^. 


-^i^jt^3^/ 


^^U^. 


i-ZZ-^^^t^  K— 2;^32-1»2^^ 


/J 


Z  i' 
^7 


y-i^Ai 


fi^Ja 


9 


/^ 


-iffj 


/^ 


not  posted  from  the  cash  book  at  all.  All  cash  sales  are  included  in  the  footing  of  the 
sales  book  and  posted  from  there.  The  amounts  in  the  Merchandise  Discount  column  are 
posted  separately  to  each  account,  as  shown  on  page  200.  The  total  of  this  column  is  posted 
to  the  debit  side  of  Merchandise  Discount  in  the  ledger.  At  the  close  of  each  day,  the 
amounts  in  the  Shipments  column  are  posted  separately  to  the  credit  of  the  respective  ship- 
ments in  the  shipment  ledger.  The  total  of  this  column  is  posted  to  the  credit  side  of  the 
proper  controlling  account,  namely,  the  Shipments  account,  in  the  general  ledger. 

Credit  Side  of  Cash  Book. — The  Merchandise  Discount  column  on  the  credit  side  of  the 
cash  book  will  contain  all  discounts  allowed  to  us  in  payment  of  bills  ot  merchandise,  the 
actual  cash  paid  being  entered  in  the  General  column.  The  Shipments  cokunn  includes  all 
payments  on  account  of  shi]3ments,  and  the  Consignments  column  all  money  paid  out  on 
consignments. 

In  posting  from  the  credit  side  of  the  cash  book,  the  amounts  in  Merchandise  Discount 
column  are  posted  to  the  debit  side  of  their  respective  accounts  in  the  ledger,  and  the 
total  of  this  column  is  posted  to  the  credit  side  of  Merchandise  Discount  in  the  general  ledger. 
The  items  in  the  General  column  are  posted  in  the  usual  way.      All  amounts  in  the  Ship- 


r.ii 


MUOliKN    ILLLSIRATIVL    l;i  n JKKICEPING 


O 


o 


1  ^  Nl 


\.\   V. 


V:  ^^  ^*:  Ci  O^r^Jo 


SHirPINX;   AND   COMMISsinX   msiN'ESS  193 

merits  column  are  posted  to  the  debit  siile  of  their  accounts  in  the  shiinucnt  ledger,  and  the 
total  of  this  column  is  posted  to  the  debit  side  of  Shipments  account  (controlling  account)  in 
the  general  ledger.  The  amounts  in  the  Consignments  column  are  posted  to  the  loose-leaf 
consignment  ledger,  and  the  total  of  this  column  is  posted  to  the  debit  side  of  the  Consign- 
ments account  (controlling  account)  in  the  general  ledger. 

The  posting  of  items  from  the  various  columns  of  the  cash  book  should  be  ilone  daily, 
but  the  footings  of  the  columns  are  not  ]iosted  until  the  end  of  the  month. 

Note  carefully  how  the  cash  book  is  closed  and  ruled  preparatory  to  posting  the  footings 
at  the  end  of  the  month. 

Letter  Impression  Book.  —  In  most  business  houses  it  is  the  custom  to  keep  a  copy  of 
every  written  order,  letter,  postal  card,  account  sales,  deposit  slip,  etc.,  which  leaves  the 
house  ill  the  course  of  its  business,  as  it  is  often  of  great  importance  that  ready  reference 
may  be  made  to  copies  of  such  papers.  This  copy  is  obtained  by  means  of  a  roller 
copying  machine,  or  of  a  letter  impression  book,  which  is  made  up  of  leaves  of  tissue  paper, 
and  a  copy  may  be  taken  in  this  book  from  either  a  pen-written  or  a  type-written  sheet.  If 
proper  ink  is  used,  several  copies  may  be  taken  from  the  same  original. 

When  letters  or  invoices  are  copied  in  the  letter  impression  book,  they  should  be  indexed 
at  once  for  ready  reference.  (See  form  of  letter  impression  book,  page  192,  showing  the 
proper  indexing.)  When  copied  on  the  machine,  the  tissue  copy  is  filed  with  the  original 
communication. 

Indexing. —  It  is  important  that  all  ledgers,  as  well  as  letter  impression  books,  be 
properly  indexed. 

The  vowel  index  shown  in  the  model  letter  impression  book  is  an  excellent  method  of 
indexing,  when  the  index  is  a  part  of  the  book  itself,  but  the  ledger  index  is  generally  a 
separate  book,  of  which  there  are  several  labor-saving  varieties  on  the  market. 

The  card  form  of  index  is  another  and  popular  method  of  indexing  accounts,  where  the 
number  of  accounts  is  large.  A  card  is  used  for  each  account,  and  it  may  contain  the 
name  of  the  account,  the  number,  address,  ledger  page,  terms,  etc.  The  cards  are  kept  in 
trays  in  a  cabinet,  and  are  arranged  in  alphabetic  or  numerical  order,  with  proper  guide 
cards  showing  the  important  divisions.  The  advantages  of  the  card  index  are  similar  to 
those  of  the  card  ledger,  explained  in  the  Retail  Grocery  Business. 

Some  bookkeepers,  before  posting  a  book,  take  the  index,  and  from  it  page  each  item  in 
the  book  from  which  posting  is  to  be  done,  by  writing  in  the  folio  column  the  page  of  the 
account  in  the  ledger.  After  all  the  items  to  be  posted  have  been  paged,  then  each  amount 
is  carried  to  the  ledger  page  indicated,  and  a  check  mark  (y  )  is  placed  next  to  the  folio 
figures.  If  the  ledger  contains  a  large  number  of  accounts,  this  method  of  posting  will  save 
time  and  also  prevent  errors,  as  the  check  mark  is  a  double  proof  that  the  posting  has  been 
done.  In  actual  practice  everv  good  bookkeeper  will  soon  memorize  the  pages  of  all  his 
principal  ledger  accounts,  and  not  be  obliged  to  refer  constantly  to  his  index. 

Bank  Account. — Instead  of  entering  the  deposits  on  the  face  of  the  check  stub  and  de- 
ducting each  check  as  heretofore  instructed,  you  will  keep  the  bank  account,  hereafter,  in 
accordance  with  the  following  method. 

Use  the  left-hand  check  stubs  for  a  record  of  the  deposits,  and  the  right-hand  check 
stubs  for  a  record  of  the  checks.  The  amount  column  of  each  of  these  stubs  will  be  footed 
and  carried  forward  from  page  to  page,  until  it  is  desired  to  show  a  balance.  This  is  done 
by  deducting  the  total  checks  from  the  total  deposits,  on  the  left-hand  check  stubs. 


];'4 


MiiDKK.N    11.I.L>1  K.\ri\  li    llM' iKKEKl'ING 


In  entering  deposits  on  the  left-hand  stubs,  write  the  amount  of  each  item  comprising 
the  deposit  a  little  to  the  left  of  the  money  column,  and  extend  only  the  total,  or  net 
amount,  of  the  dejiosit  in  the  money  column.  The  record  for  a  deposit  should  be  a  copy  of 
tiie  deposit  slip,  ;is  heretofore. 

Sonic  business  houses  keep  a  detailed  record  of  deposits  in  a  separate  book,  called  a  deposit  book,  and  enter 
only  the  net.  or  total  amount,  and  the  date  in  the  check  book.  Others  take  an  inipre.ssion  of  the  deposit  slip  in 
a  tissue  book,  like  a  letter  book,  or  on  a  roller  copying  machine,  and  enter  only  the  amount  and  date  in  the  check 
book.     This  is  one  of  the  many  labor-.saving  methods  used  in  modern  business  hou.ses. 

When  checks  are  paid  by  the  banks,  they  are  stamped  Paid,  or  are  otherwise  canceled, 
and  if  drawn  by  their  own  depositors,  they  are  filed  imtil  the  depositors'  pass  books  are 
written  up,  or  statements  are  inade  out,  when  they  are  returned  to  the  makers. 

On  account  of  the  freedom  with  which  checks  circulate,  and  the  consequent  liability  of  their  getting  into  the 
hands  of  dishonest  or  unscrupulous  persons,  several  means  are  employed  to  prevent  the  raising  or  altering  of 
checks  and  other  similar  negotiable  instruments.  Two  of  the  most  common  means  of  safeguarding  checks  are 
by  the  use  of  safety  paper  on  wliicli  erasures  cannot  be  made  without  showing,  and  by  the  use  of  mechanical 
cliock  protectors,  of  which  there  are  several  varieties.  Some  of  these  protectors  rough  or  partly  perforate  the 
written  figures  in  the  amount,  while  others  cut  out  or  perforate  in  figures  (omitting  the  cents)  the  amount  ex- 
pressed in  the  check.  Another  form  cuts  out  or  perforates  the  expression  "not  over  S  too,"  or  any  other  de- 
sired amount. 

The  cancellation  of  checks  in  banks  is  done  either  liy  rubber  statnps  or  by  canceling  or  perforating  machines, 
which  are  operated  either  by  hand  or  by  electricity.  These  m.ichines  will  cancel  from  ten  to  fifty  or  more 
checks  in  one  operation,  depeiuiiiig  U|)on  the  kind  of  macliine  and  the  power  used. 


REco.NXiLi.vriox  OF  Bank. 

B.\L.\XCE 


July 


31  i  Total  deposits 
Total  checks 
1  True  bank  balance 


10205  94 
6009  48 
4196   46 


19- 
.Aug. 


Checks  out 
Nos. 

352               103-63 
361                 66.37 
365                 90.04 
369               283.69 

1 

1 

1 
543 

73 

Bank's  balance 

3652 

73 

True  balance 

1  4196 

46 

Reconciliation  of  Bank  Balance.  —  The  balance  in 
the  bank  on  any  given  date,  as  shown  by  the  pass 
book  when  written  up  as  of  that  date,  or  by  the  bank 
statement,  will  agree  with  the  check  book  balance 
only  when  all  checks  issued  prior  to  the  balancing  of 
the  check  book,  and  the  writing  ii])  of  the  pass  book, 
have  been  presented  at  the  bank,  and  either  certified 
or  paid.  This  will  rarely  occur  in  a  going  business, 
and  consequently  there  will  generally  be  a  difference 
between  the  two  balances,  which  should  be  adjusted 
in  the  check  book.  This  is  done  by  deducting  from 
the  check  book  balance  the  amount  of  the  outstanding 
checks,  as  shown  by  the  vouchers  returned  with  the 
jiass  book  or  statement.  Tnesc  checks  should  be 
listed  in  detail  on  the  check  book  stub.  This  is 
called  nccyiiciliiis:  tlic  hank  balance.     The  check  book 


balance  is  the  true  balance,  and  is  the  amount  to  be  carried  forward  in  the  check  book. 


PRELIMINARY    WORK 
Jui.v   I,    19- 

You  have  formed  a  partnership,  under  the  name  of  E.  H.  Reed  &  Co.,  with  Ellis  H. 
Reed,  who  has  been  engaged  in  the  Country  Produce  and  General  Merchandising  business, 
at  312  South  St.,  your  city. 

You  are  to  invest  S5000  cash,  and  also  a  shipment  to  Thos.  \V.  Bowen  &  Co.,  Dover, 
\o.   3,  valued   at  S  1955,   making  a  total  investment  of  S6955.     Ellis   H.   Reed  owns  the 


o 


SHIPPIN'C.    AM)    tOMMISSIOX    BUSINESS  195 

building  at  312  South  St.,  valued  at  $9500.  He  transfers  this  property,  bv  deed,  to  K.  H. 
Reed  &  Co.  He  also  owns  two  horses  and  a  delivery  wagon,  valued  at  S325,  and  office 
furniture  and  fixtures,  valued  at  $250.  He  has  on  hand  the  following  goods  :  600  bu.  pota- 
toes, invoiced  at  60!-'  per  bu.;  140  brls.  api)les,  invoiced  at  S3.50  per  brl.  ;  i  i  boxes  cheese, 
fio;;  lbs.,  invoiced  at  1 1  ?  per  lb. 

The  following  personal  balances  from  customers  are  due  Ellis  II.  Reed:  Theodore 
Crosby  &  Co.,  $  129.33;  A.  W.  Noone  &  Co,  S528.44;  Public  Market  Co.,  S244.60;  Geo. 
11.  Tucker  &  Co.,  S204.13;   City  Hotel  Co.,  S  250.45. 

Ellis  H.  Reed  owes  the  following  balances  :  Russell  &  Birkett,  S426.45  ;  Curtice,  Olnev 
&  Co.,  S  1326.40;  Lutz  Bros.,  S714.50;  Gillette  &  Hennigan,  S541  20;  and  a  note  in  favor 
f  the  Fischer  Flour  Co.,  St.  Louis,  dated  June  16  at  30  days,  S  845  27. 

The  new  firm  assumes  all  the  liabilities  of  Ellis  H.  Reed,  and  takes  ovjr  his  resources, 
as  listed  above.  Each  partner  is  to  receive  interest  at  six  jier  cent  on  his  net  investment, 
after  which  the  gains  and  losses  are  to  be  divided  equally. 

The  form  on  page  196  shows  the  journal  and  cash  book  entries  for  the  investments  of 
Ellis  H.  Reed  and  yourself  which  you  will  now  make. 

Enter  the  shipment  to  Thos.  W.  Bowen  &  Co.,  Dover,  No.  3,  $  1955,  in  the  shipment 
ledger.     Write  for  explanation,  sliippcd  June  24,  Investment  of  {Student). 

No.  A  1. — Take  your  investment,  SSOOO  cash,  from  your  voucher  pad,  and  place  it  in 
Cash  Drawer. 

Prepare  a  circular  letter,  soliciting  shipments  of  country  produce  or  general  merchan- 
dise, and  mail  a  copy  to  each  out  of  town  customer  with  whom  3'ou  did  business  in  June 
(wholesale  grocery  business).  These  are  all  country  merchants,  and  are  likely  to  have 
such  goods  to  dispose  of. 

The  following  is  a  form  of  circular  letter  : 

Form  of  Circul.xr  Letter 
Mr.  Geo.  H.  Ailing  Albany,  N.Y.  July  1,  19  —  . 

Utica,  N.  Y, 

Dear  Sir,  —  We  desire  to  call  attention  to  the  fact  that  we  have 
openei  at  348  Central  St.,  this  city,  a  large  and  commodious  store  for 
the  handling  of  every  variety  of  country  produce  —  butter,  eggs,  fruit, 
vegetables  —  and  canned  goods,  to  be  sold  on  commission.  We  shall  also 
conduct  a  general  merchandising  business,  and  are  prepared  to  buy  any- 
thing in  the  above  line  at  the  highest  market  rates. 

We  solicit  shipments  of  first-class  goods  only,  and  are  prepared  to 
.;.ake  cash  advances  for  all  staple  goods  on  receipt  of  bill  of  lading.  We 
render  accotants  sales  and  send  cash  remittances  as  soon  as  consignments 
are  disposed  of.  Our  charges  are  57b  of  sales  and  1^  for  storage  and 
insurance . 

We  refer,  by  permission,  to  the  First  National  Bank  and  the  Empire 
Storage  Company  of  this  city. 

Soliciting  your  patronage,  we  are. 

Very  respectfully  yours. 

The  Geo.  H.  White  Commission  Co. 


196 


MODERN   ILLUSTRATIVE   BOOKKEEPING 


JoLK.NAi,  Entry 
July  i,  19 — 


Ellis  H.  Reed  and  (student's  name)  have  this  day  entered  into  a  part- 
nership to  carry  on,  at  312  South  St..  a  Commission  and  General  Mer-  | 
ch:indisin<r  business,  under  the  name  of  E.  H.  Reed  &  Co.  I[ 

Kach  ])artncr  is  to  receive  si.\  (ler  cent  interest  on  his  net  investment, 
after  which  the  gains  and  losses  shall  be  divided  equally. 

Ellis  H.  Reed  invests  the  following  resources  and  the  firm  assumes 
th-;  followin";  liabilities : 


Real  Estate 

Mdse. 

Horses  and  Wagons 

Furniture  and  Fixtures 

Theodore  Crosby  &  Co. 

A.  W.  .\oone  &  Co. 

Public  .Market 

Geo.  H.  Tucker  it  Co. 

City  Hotel  Co. 

Russell  &  IJirkett 

Curtice.  Olney  ^:  Co. 

Lutz  Bros. 

Gillette  &  Hennigan 

Notes  Pavable 


Ellis  H.  Reed 


valued  at 


balance  acct. 


Note  favor  Fischer  Flour  Co.. 
St.  Louis,  dated  June  l6. 
at  30  days. 

net  investment 


9500 
916 

325 
250 
129 

52S 

244 
204 
250 


55 


(Student's  name)  invests  cash.  S  5000.  and   a   shipment.  -3.  to  Thos. 
\V.  Bowen  &  Co.,  Dover,  valued  at  S1955. 
Cash 

Sliipmenls 
(Student) 


Cash  Book  Entry 


as  above      5000 

■•      ■•      I     '955 
Investment 


426  45 

1326  40 

714  50 

54'  20 

845  27 


8494   68 


695s  I 


19— 

July 


(Student's  name) 


Investment 


5000 


July   10 

Order  from  Gillette  &  Hennigan,  Baltimore,  Md.,  at  their  lowest  ca.sh  discount,  20  bo.xes 
St.  John  River  oranges.  50  boxes  lemons,  12  doz.  pineapples. 

The  above  and  following  letters  should  be  very  carefully  prepared  in  copying  ink, 
and  after  ajiproval  by  your  teacher,  an  impression  of  each  letter  should  be  taken  in  the 
letter  book.  Ask  your  teacher  to  show  you  the  method  of  taking  an  impression  in  this 
book.  Prepare  a  vowel  index  on  the  second  page  of  the  co\'er  of  your  letter  book,  as  shown 
in  the  illustration  on  page  192,  and  index  your  letters,  using  the  first  vowel  in  the  surname 
of  the  person  or  first  name  of  the  firm  as  a  guide  for  position.  Inclose  the  letter  in  a 
properly  addressed  envelojje,  and  place  in  Vouchers  for  Others. 


SHIPPING   AND   COMMISSION   BUSINESS  IKT 

Order  from  Russell  &  Birkett,  Penn  Yan,  N.  Y.,  on  account,  30  days,  50  brls.  XXX 
tamilv  flour,  50  brls.  XX  family  flour,  25  brls.  pastry  flour. 

Order  from  Curtice,  OIney  &  Co.,  Rome,  N.  Y.,  36  cases,  "jz  doz.,  canned  sugar  corn  ; 
72  cases,  144  doz.,  canned  tomatoes.  Order  these  sent  by  Interstate  Transportation  Com- 
]iany,  fast  freight,  and  request  them  to  draw  on  you  at  30  days  for  the  amount  of  the  bill. 

Order  from  Lutz  Bros.,  Allegheny,  Pa.,  5  brls.  sour  Jaickles,  4  brls.  sweet  pickles,  25 
I  ases,  50  doz..  Diamond  ketchup,  16  oz.  Order  the  goods  shipped  by  Interstate  Transpor- 
tation Company,  and  request  60  days'  credit. 

TRANSACTIONS 
July  16 

No.  1.  —  This  advice  of  shipment  accompanies  a  lot  of  goods  received  from  Edwin 
Mason  &  Co.,  of  Milford,  your  state,  to  be  sold  on  their  account  and  risk. 

Take  from  your  package  of  business  forms  the  pad  of  loose-leaf  consignment  sale.3 
blanks,  and  in  the  square  at  the  top  write  the  stencil  mark  of  this  consignment,  which  will 
be  M-i  (see  form  of  loose-leaf  sales  blank,  page  184).  Fill  out  the  consignment  sales  sheet 
with  the  date  of  shipment,  name  of  consignor,  etc.  Opposite  Received  write  the  article.-^ 
as  shown  by  the  advice  received  with  the  goods.     (See  form,  page  184). 

Paste  the  gummed  edge  of  the  loose  leaf  to  the  back  of  the  cover  of  the  consignment 
ledger.     Place  the  advice  of  shipment  in  your  \'oucher  File. 

It  will  be  noticed  that  the  freight  and  cartage  charges  on  the  above  consignment  were  not  paid  at  the  time 
the  goods  were  received.  This  is  the  practice  in  cities  where  truck  or  dray  companies  are  established,  and  also, 
as  regards  freight  charges,  when  proper  arrangements  have  been  made  with  tlie  railroad  companies.  The  freight 
or  drayage  liills  are  lirought  in  daily,  weekly,  or  monthly,  and  one  check  is  drawn  for  the  total  amount. 

In  business  when  goods  are  shipped  by  freight,  the  shipper  usually  sends  the  bill  of  lading  with  invoice  or 
advice  of  shipment  to  the  consignee.  If  a  shipment  has  been  made  under  a  straight  bill  of  lading,  the  railroad 
company  will  notify  the  consignee,  usually  by  post  card,  when  the  goods  have  arrived  and  are  ready  for  delivery, 
and  the  amount  of  freight  charges,  if  any,  on  the  shipment.  .\%  a  rule,  this  notice  must  be  presented  at  the 
freight  office  and  the  freight  charges  paid,  before  the  goods  can  be  taken  away.  When  freight  charges  are  paid, 
t.vo  receipts  are  given;  one  by  the  railroad  company  for  the  money,  and  the  other  by  the  consignee  or  his 
iiljresentative  for  the  goods.  These  receipts  are  made  out  by  the  railroad  company  after  the  arrival  of  the 
l;i  lods  and  before  the  notice  is  sent  to  the  consignee.  The  receipts  contain  the  date  on  which  they  are  made 
iiut ;  date  and  number  of  waybill ;  the  car  number  and  initials ;  the  weight,  rate  and  amount,  and  the  advance 
charges,  if  any.     The  procedure  when  goods  are  shipped  under  an  order  bill  of  lading  will  be  explained  later. 

No.  2.  —  This  advice  of  shipment  is  received  with  goods  mentioned  from  the  Western 
New  York  Preserving  Company,  Springville,  N.  Y.,  and  should  be  entered  precisely  as  the 
lot  received  in  No.  i  (W-i).     Paste  the  gummed  edge  on  the  back  of  M-i. 

No.  3. — This  advice  has  been  received  from  Rice  &  Pond,  accompanying  goods  as 
mentioned. 

No.  4. — This  invoice  is  for  goods  ordered  by  you  July  10,  from  Gillette  &  Hennigan, 
and  should  be  pasted  in  the  invoice  book  (Blank  No.  2),  as  in  previous  work.  Verify  the 
calculations  and  O.K.  the  same.  The  receiving  clerk  has  already  O.K'd.  the  quantities. 
\'erify  all  calculations  and  O.K.  all  invoices,  after  which  paste  the  merchandise  invoices  in 
the  invoice  book,  and  file  the  other  invoices  or  bills  in  the  Voucher  File. 

No.  5. — -This  invoice  from  E.  R.  Coburn  &  Co.  is  for  books  and  other  office  supplies. 

Make  no  entry  at  present.  The  amount  will  be  found  in  your  cash  items  to  be  paid  at 
the  end  of  the  dav,  and  entered  at  that  time. 


ll'> 


MiiDKKN    U.i.iM  KAl  1\  K    l;' 11  iKKKEPING 


No.  6.    -This  invoice  from  Lutz  Bros,  is  for  goods  ordered  by  you  July  lo.    (See  \o.  4.) 

Sales  from  Blotter.  —  In  this  month's  work  a  large  number  of  sales  will  be  made  to 
local  persons,  whose  orders  are  given  verbally  and  are  entered  in  an  order  book  or  blotter. 
You  will  receive  among  your  incoming  vouchers  a  list  of  these  sales  each  day,  and  will 
make  out  the  bills  as  usual.  In  entering  these  sales  in  the  sales  book  be  sure  that  the 
stencil  mark  of  the  consignment  appears  opposite  each  item  sold  from  that  consignment, 
and  that  these  items  are  carried  to  the  loose-leaf  consignment  ledger  from  the  Consign- 
ments column  of  the  sales  book. 

A  blotter  was  originallv  a  kind  of  day  book  in  which  all  transactions — purchases,  sales,  receipts  and  dis- 
bursements of  cash,  etc.  —  were  first  entered  in  memorandum  form  and  from  which  the  entries  were  transferred 
to  the  main  books.  .Sometimes  it  is  used  for  orders  only,  in  wliich  case  it  is  equivalent  to  an  order  book.  The 
blotter  is  generally  made  of  heavy,  coarse  paper,  and  the  records  are  made  in  pencil. 

No.  7. — These  sales  have  been  made  as  per  blotter,  and  should  be  entered  in  the  sales 
book  (see  model,  page  1S7).  Be  sure  that  the  cash  sale  is  entered  in  the  cash  book,  and 
checked  off  both  in  cash  book  and  in  sales  book  (see  explanation,  page  189).  Place  the 
voucher  in  Voucher  File. 

In  this  month's  work  an  account  will  be  ke])t  with  freight,  and  all  amounts  paid  for 
freight  on  your  own  merchandise  will  be  charged  to  Freight  account  instead  of  to  Merchan- 
dise account. 

The  items  from  the  Consignments  columns  of  the  cash  book  and  from  the  sales  book 
should  be  carried  to  the  loose-leaf  consignment  ledger  at  the  close  of  each  day,  as  it  is 
necessary  that  they  appear  there  before  an  account  sales  can  be  rendered  to  the  consignor ; 
and  it  is  also  necessary  that  the  items  in  the  Shipments  columns  of  the  cash  book  be  carried 
to  the  shipment  ledger  in  the  .same  manner,  as  they  must  appear  there  before  the  closing  of 
any  accounts  in  the  shipment  ledger.  If  there  are  any  entries  to  shipments  or  consign- 
ments in  the  journal,  these  should  also  be  posted  at  the  end  of  each  day. 

The  following  is  an  illustration  of  the  sales  book  with  the  first  charge  for  July  16. 
showing  the  method  of  entering  sales  from  consignments  and  regular  merchandise  sales 
together.  The  check  marks  show  that  the  amount  of  merchandise  sold  from  the  consign- 
ment has  been  transferred  to  the  consignment  ledger. 


Commission  S.vles  Book 
July   16,   19 — 


IsV.UCE 

COSSTS. 

Mpm 

.M-i 
.\I-l 

V 

City  Hotel  Co. 
5  cases  Eggs 
2  tubs  Butter 
2  boxes  Lemons 

a  c                                30  days 

120  dz.                                 .22 

120  lbs.                                .24 

475 

26    40 

28    80 

9i  50 

55 

20 

9 

50 

64|7o 

No.  8.       This  is  an  order  on  the  cashier  to  pay  various  bills.     Pay  the  items  in  currency. 

Enter  in  your  cash  book,  debiting  the  i)roper  accounts  (see  model,  page  191)-  Allow  a 
line  for  each  charge  for  freight  jiaid  on  consignments.  (Place  the  money  in  Cash  Paid  Out. ) 
Post  all  freight  charges  on  consignments  from  the  cash  book  to  the  proper  consignment  in 
the  loose-leaf  consigiunent  ledger,  placing  the  amount  opposite  the  printed  word  Frciglil. 
Remember  to  debit  Freight  in  the  cash  book  for  all  freight  paid  on  your  own  merchandise. 


SHIPPING    AND    COMMISSION    BUSINESS  lUi) 

No.  9. — This  account  sales  and  draft  are  received  from  Thos.  W.  Bowen  &  Co.,  and  as 
they  have  been  notified  of  the  change  in  your  business,  they  have  made  the  draft  i)ay- 
able  to  E.  H.  Reed  &  Co. 

Enter  in  yoyr  cash  book,  crediting  Shipment  to  Thos.  W.  Bowen  &  Co.,  No.  3,  for  the 
amount  of  the  !iet  proceeds,  and  carrying  the  amount  of  net  proceeds  to  the  credit  of  ship- 
ment No.  3,  in  siiipment  ledger.  There  has  been  a  gain  on  this  shipment.  Close  the  ship- 
ment in  shipment  ledger  by  entering  the  amount  of  the  gain  in  the  debit  column,  the  word 
gain  in  the  explanation  column,  and  the  date  in  the  date  column.  Make  proper  use  of 
red  ink  as  in  closing  other  ledger  accounts.     (See  page  1S6. ) 

No.  10.  —This  check  has  been  received  from  Theodore  Crosby  &  Co.,  in  full  of  account, 
and  is  indorsed  by  Ellis  H.  Reed  to  E.  H.  Reed  &  Co. 

No.  11.  —  Open  an  account  with  the  Traders  Bank,  and  deposit  $4900  cash,  the  check 
of  Theodore  Crosby  &  Co.,  and  the  draft  received  from  Thos.  VV.  Bowen  &  Co.  Copy  the 
items  from  your  deposit  ticket  on  the  left-hand  stub  of  your  check  book,  and  extend  the 
total  into  the  money  column.  Do  not  enter  the  deposit  on  the  right-hand  stub,  as  that  will 
be  used  only  for  a  record  of  the  checks  drawn. 

It  is  a  good  practice,  as  well  as  the  usual  custom,  to  deposit  checks  on  the  day  they  are  received  or  on  the 
following  day.  If  a  check  is  not  deposited  within  a  reasonable  time,  usually  considered  to  be  twenty-four  hours, 
and  the  bank  on  which  it  is  drawn  should  fail,  the  maker  of  the  check  would  be  discharged  from  loss  occasioned 
by  the  delay  of  the  depositor. 

You  will  now  prove  the  cash  and  post  the  entries  in  your  books  in  accordance  with  the 
following  instructions. 

Posting.  —  Open  accounts  in  your  general  ledger,  as  follows,  treating  the  third  blank  page 
as  page  i:  Page  i,  E.  H.  Reed,  (Student),  Merchandise,  each  one-third  page.  Page  2, 
E.xpense,  Furniture  and  P~ixtures,  Real  Estate,  Commission,  each  one-fourth  page.  Page  3, 
Charges,  Horses  and  Wagons,  Office  Supplies,  Merchandise  Discount,  each  one-fourth  page. 
Page  4,  Shipments,  11  lines,  Discount,  5  lines,  Freight,  12  lines,  and  Loss  and  Gain,  17  lines. 
Page  5,  Consignments,  Notes  Receivable,  Notes  Payable,  one-third  page  each.  Page  6, 
Theodore  Crosby  &  Co.,  A.  W,  Noone  &  Co.,  Public  Market  Co.,  Geo.  H.  Tucker  &  Co., 
each  one-fourth  page.  Page  7,  City  Hotel  Co.,  one-fourth  page.  (Space  is  allowed  on  this 
page  and  the  two  following  pages  for  additional  accounts,  to  be  opened  later.)  Page  10, 
Russell  &  Birkett,  Curtice,  Olney  &  Co.,  Lutz  Bros.,  Gillette  &  Hennigan,  each  one-fourth 
page.  Page  11.  (This  page  is  reserved  for  additional  creditor  accounts.)  Ins|3ect  the 
votichers  for  the  addresses  of  personal  accounts,  and  enter  them  on  the  ledger. 

Prepare  an  index  of  the  ledger  on  the  first  two  pages  of  the  book,  these  having  been 
specially  ruled  for  the  purjiose.  You  will  note  that  each  page  is  divided  into  two  equal 
parts  by  a  vertical  red  line.  Write  a  capital  A  in  the  middle  of  the  first  line  at  the  top  of 
the  left-hand  side.  In  middle  of  the  ninth  line  below  this,  write  V>.  On  the  ninth  line  below 
B,  v.rite  C,  and  so  on,  going  from  the  bottom  of  the  left-hand  part  to  the  top  of  the  right- 
hand  portion  of  the  page,  and  then  to  the  next  page,  until  every  letter  of  the  alphabet  has 
been  assigned  a  space.  Assign  only  one  space  to  each  of  the  following  groups:  H — I — J, 
P— O,  U— V,  X— Y— Z. 

Write  the  names  of  all  the  accounts  in  the  ledger  in  their  proper  alphabetic  place  in 
the  index,  and  after  each  account  write  the  page  of  the  ledger  on  which  it  appears.  In 
personal  accounts,  the  initial  letter  of  the  surname  or  of  tne  first  principal  word  determines 
its  place  in  the  index. 


200 


MODERN    ILLL'STRATIVt:   IIOOKKEEPING 


In  this  month's  business  the  posting  is  somewhat  more  complicated  than  in  the  previous 
u'ork,  and  it  is  well  to  get  a  clear  idea  of  the  books  from  which  the  entries  in  the  general 
ledger  are  taken,  and  the  manner  in  which  they  are  posted.  The  general  ledger  should  be 
divided  into  sections,  as  in  the  previous  work,  the  first  containing  the  partnei^s'  accounts  and 
all  accounts  showing  losses  or  gains,  including  an  account  with  Shipments  and  the  Loss 
and  Gain  account.  Notes  Receivable,  Notes  Payable,  and  Consignments  are  placed  in 
the  general  ledger  because  they  are  of  a  general  character.  The  second  section,  called  the 
customers'  ledger,  should  contain  all  personal  accounts  which  are  resources  to  the  business. 
The  third  section  should  contain  all  personal  accounts  which  are  liabilities,  namely,  accounts 
■with  the  creditors  of  the  business. 

Posting  the  Journal.  —  Post  your  journal  as  usual. 

Posting  Debit  Side  of  Cash  Book.  —  Post  all  items  in  the  General  column  of  the  cash 
book  on  the  debit  side  as  in  previous  cash  books,  except  that  cash  sales  of  merchandise 
which  are  entered  in  the  sales  book  are  not  posted,  but  checked  off  both  in  the  cash  book 
and  in  the  sales  book  (see  model,  page  190).  Do  not  forget  to  credit  each  personal  account 
with  merchandise  discount  which  may  appear  on  the  same  line  in  the  Merchandise  Discount 
column,  as  well  as  with  the  net  amount  of  cash  received  (see  model  below). 


W.  B.  Andrews 


19— 

Jan. 


.S.B. 


.1  >9- 

250 

Jan. 

7 
7 

C 
Dis 

2 

^37 

1  "* 

1 

5° 


Posting  Credit  Side  of  Cash  Book.  —  Post  the  items  in  the  General  column  as  heretofore. 
Do  not  forget  to  debit  each  personal  account  with  the  merchandise  discount,  as  well  as 
with  the  net  amount  of  cash  paid  out. 

Posting  the  Sales  Book.  —  Post  as  in  jjrcvious  work  to  the  debit  side  of  personal  accounts 
in  the  ledger,  except  that  cash  sales  should  not  be  posted  at  all,  but  checked  off  in  the  sales 
book  (see  model,  page  187). 

Posting  the  Invoice  Book.  — •  Post  as  usual  to  the  credit  side  of  the  personal  accounts. 

Posting  the  Account  Sales  Register.  —  Post  any  amounts  which  may  be  in  the  Accounts 
to  be  Posted  column  to  the  credit  of  the  accounts  indicated  in  the  Name  of  Account  column. 

At  the  close  of  each  day  it  is  well  to  go  over  your  work  and  note  the  following : 

First,  that  you  have  posted  the  sales  from  consignments  from  the  sales  book  to  the 
loose-leaf  consignment  ledger  under  Sales. 

Second,  that  you  have  posted  eacli  item  jiaid  for  consignments  from  the  credit  side  of 
the  cash  book  to  the  consignment  ledger  op[)osite  F"reight,  Charges,  etc. 

Third,  that  you  have  |)osted  anv  cash  received  from  shipments  from  the  debit  side  of 
the  casii  book  to  the  credit  side  of  the  res])ective  shipment  accounts  in  the  shipment  ledger. 

Fourth,  that  you  have  posted  any  cash  paid  on  account  of  shipments  from  the  credit 
side  of  the  cash  book  to  the  debit  side  of  the  respective  shipment  accounts  in  the  shipment 
ledger. 

Fifth,  that  you  have  posted  all  other  entries  in  the  original  books  of  entry  that  should 
be  posted. 


SHIPPING    AND    CUMMlSSKiX    BUSINESS 


201 


July   17 
No.  12. — This  invoice  has  been  received  from  Curtice-Olney  &  Co. 

No.  13.  — This  advice  of  shipment  accompanies  goods  received  from  Fischer  Flour  Com- 
[jany,  and  incloses  a  draft  at  ten  days'  sight  for  S300,  which  you  will  accept,  payable  at 
Traders  Bank,  and  place  in  Notes  Payable  File. 

Enter  the  consignment  on  a  loose-leaf  sales  leaf,  and  under  Advances  write  the  amount 
of  the  draft,  $joo.  Make  a  journal  entry,  debiting  Consigmncnts  and  crediting  Notes  Pay- 
able for  the  amount  of  the  draft,  as  follows : 


Consignments 

Notes  Payable 


Accepted  Fischer  Flour  Co.'s 
draft  at  10  days,  on  account  of 
goods  received  to  be  sold  on  their 
account  and  risk. 


300 


300 


No.  14.  —  This  order  is  received  from  Thomas  Varick  &  Co.  Take  the  canned  goods 
from  lot  W-i — peas,  $1.30;  corn,  $1.10;  tomatoes,  $1.25  ;  and  the  balance  of  the  order 
from  your  own  goods  —  apples,  $3.75;  potatoes,  75^.  (Enter  in  the  sales  book,  as  per 
model,  page  187.)     Do  not  forget  the  stencil  mark. 

No.  15.  —  This  letter  from  F.  H.  Larkin  &  Co.  solicits  a  shipment  from  you. 
Make  a  shipment  invoice  —  apples,  $3.50;  potatoes,  6o>-'  —  and  enter  in  your  shipment 
ledger  (see  form,  page  186).     Pay  for  insurance,  'j^'?,  currency,  and  enter  in  the  cash  book. 

In  business  a  straight  bill  of  lading  would,  of  course,  be  made  out  for  a  shipment  of  this  kind,  but  in  view 
of  the  practice  which  you  have  had  in  the  introductory  work,  the  bills  of  lading  will  be  omitted  in  this  set. 

The  following  is  the  form  of  the  shipment  ledger  as  it  will  appear  after  this  entry  has 
been  made,  and  after  the  cash  paid  for  insurance  has  been  posted  from  the  Shipment  column 
of  the  cash  book  at  the  close  of  the  dav. 


Shipment  Ledger 


Index, 
Check, 

AND 

Folio 

July  16,  19— 

Ledger  Accounts 

Mdse. 

Debits 

Credits 

Folio  and 
Explanation 

Date 

Thos.  W.  Bowen  i  Co.,  -3.    Dover, 

Shipjied  June  24. 

Investment  of  (Student's  name). 

17 

F.  H.  Larkin  &  Co.,           Northboro, 

50  brls.  Apples.                              3.50 

200  bu.  Potatoes                               601? 

I 
1 

175 
120 

1955 

7l>  ,' 

2058 

62 

C.    2 

Gain 
C.3 

19- 

July 

16 

-  (-")  _T  '  ' 

6j         2058 

62 

295 

75 

17 

No.  16. —  These  sales  have  been  made  from  the  blotter,  and  should  be  entered  in  the 
.sales  book.     The  cash  should  be  entered  in  the  cash  book.     (See  transaction  No.  7.) 

The  small  cash  sale  of  merchandise,  $6.  is  not  entered  in  your  sales  book,  but  posted  direct  to  the  credit  of 
Merchandise  from  the  cash  book.  In  every  business  there  will  be  more  or  less  of  these  small  .sales,  even  though 
it  be  strictly  wholesale  business,  for  it  is  quite  a  common  practice  among  business  houses  to  send  in  friends  with 
a  request  that,  as  a  favor,  a  small  quantity  of  goods  be  sold  them  at  wholesale  prices,  and  it  is  customary  for  a 


20i 


MODERN    ILLUSTRATIVE   BOOKKEEPING 


wholesale  house  to  comply  with  such  a  request.  If  such  sales  are  made  from  consignments,  it  is  necessary  that 
thev  be  entered  in  the  sales  book,  Ijut  when  made  from  your  own  ^oods.  it  is  customary  to  enter  them  in  the 
cash  book  onlv.  and  post  to  Merchandise  account  direct  from  that  book.  If  many  such  sales  are  occurring,  it 
is  well  to  have  a  special  column  for  merchandise  sales  in  the  cash  book.  In  this  business,  as  there  are  only  a 
few  sales  of  this  nature,  they  will  be  carried  to  the  General  column  of  the  cash  book,  and  Merchandise  account 
credited  from  that  book.     (See  entries  of  the  nth  and  27th  in  cash  book,  page  190.) 

No.  17.  —This  invoice  from  Russell  &  Birkett  is  for  goods  ordered  by  you  July  10. 

No.  18. — -These  items  should  be  entered  in  the  cash  book,  and  the  item  of  S55  also 
entered  in  the  consignment  ledger,  opjiosite  Freight,  Cartage,  etc.,  on  the  loo^e  leaf  for 
Fischer  Flour  Co.'s  con.signment.  Make  checks  for  all  bills,  e.vcept  the  one  of  Sio  for 
care  of  horses,  which  jjay  in  cash. 

No.  19. — This  check  is  received  with  an  order  from  A.  \\'.  Xoone  &  Co.  Make  cash 
book  entry,  but  carry  the  order  over  in  Voucher  File  until  the  i8th. 

No.  20.  —  Deposit  checks  of  \V.  H.  Alden  &  Co.  and  A.  W.  Noone  &  Co. 

Jli.v    18 

No.  21.  —  Render  an  account  sales  to  Edwin  Mason  &  Co.,  and  inclose  a  New  York  draft 
for  the  amount  of  the  net  proceeds. 

Turn  to  your  consignment  ledger  and  see  that  all  sales  from  this  consignment,  M-i, 
have  been  transferred  from  the  sales  book  to  the  second,  or  sales,  column  of  the  loose  leaf 
stenciled  M-i  in  the  consignment  ledger.  Foot  this  second,  or  sales,  column,  and  place  the 
amount  at  the  bottom  of  the  page.  Find  the  commission  at  5  %.  and  write  in  the  first  col- 
umn of  the  loose  leaf  the  amount,  $13.34.  Take  i  %  of  the  sales  for  insurance,  storage, 
etc.,  and  place  it  opposite  the  word  Charges,  under  which  head  insurance,  storage,  etc.,  will 
be  kept  in  the  ledger.  Subtract  the  sum  of  the  amounts  in  the  first  column  from  the  footing 
of  the  second  column,  and  place  the  difference  opposite  Net  Proceeds  in  the  first  column  of 
the  loose  leaf.  (See  model,  page  184.)  If  you  have  made  no  mistake  in  addition  or  sub- 
traction, the  account  will  now  balance.  To  show  this,  rule  and  foot.  The  amount  of  the  net 
proceeds  is  to  be  sent  to  \L  Mason  &  Co.  by  New  York  draft,  the  cost  of  which  you  will  pay. 
Wake  out  a  check  for  the  amount  of  the  net  proceeds  of  the  consignment  plus  25  cents. 

The  following  is  a  form  of  check  to  be  used  in  the  purchase  of  New  York  drafts : 


r 


.//i--^ 


Til! 


©anriTr  tbnU 


^ 


(^./:^yl^^. 


^^^^:^rAe?t^i,</2Z^^.Ad^ 


.^(T- 


■,^^£ 


z^r^r 


^^:^7^^,'XY~ 


^.^: 


i\\.l.F.CE  CL'RRESCr. 


Indorse  the  draft  (Voucher  No.  2i)  to  E.  Mason  &  Co. 

Some  business  houses  have  the  draft  made  payable  to  the  order  of  the  person  to  whom  it  is  sent,  but  it  is 
better  to  make  the  draft  payable  to  your  own  order  and  indorse  it  to  the  person  to  whom  it  is  to  be  sent,  as  the 
draft  will  then  show  on  its  face  the  name  of  the  party  who  sent  it. 


SHIFPIN'G    AND   COMMISSION    BUSINESS  203 

Enter  in  your  account  sales  register  the  information  called  for  by  the  columns  of  that 
book  (see  pages  i88  and  189),  taking  the  amounts  from  the  loose  leaf. 

Be  sure  to  enter  the  amount  of  the  draft  in  the  proper  column. 

The  form  on  page  184  shows  the  loose  leaf  of  E.  Mason  &  Co.'s  consignment  No.  i  as 
it  should  appear  at  the  present  time. 

Enter  in  your  cash  book,  debiting  Const.  Mason  &  Co.  .Vo.  /  for  the  amount  of  the  draft, 
and  Expense  for  the  cost  of  the  draft,  25^.  If  a  large  number  of  New  York  drafts  are 
sent,  so  that  there  would  be  a  considerable  amount  paid  for  exchange,  an  account  with 
collection  and  exchange  should  be  kept,  but  in  this  business  it  is  not  thought  advisable  to 
open  such  an  account,  and  Expense  is  debited   for  the  exchange  on  drafts. 

Detach  the  loose  leaf  at  the  perforated  line  from  the  ledger,  and  take  an  impression  of 
it  in  the  letter  book.  Place  the  New  York  draft  and  the  loose  leaf  (M-i)  in  an  envelope 
properly  addressed,  and  place  in  Vouchers  for  Others. 

As  the  consignment  is  now  closed,  and  you  have  sent  the  net  proceeds  to  the  consignor, 
it  is  evident  that  there  is  no  necessity  for  any  record  of  this  lot  in  your  books.  If  your 
school  is  not  provided  with  the  proper  letter  press,  then  the  entry  in  the  account  sales 
register  will  be  a  sufficient  record  of  the  transaction. 

No.  22.  —  Render  an  account  sales  of  lot  R-i  received  from  Rice  &  Pond  and  remit  ]iro- 
ceeds  by  check. 

No.  23.  —  Memorandum  of  shipment  from  Edwin  Mason  &  Co.     The  stencil  will  be  M-2. 

No.  24.  —  Memorandum  of  goods  consigned  to  you  by  Rice  &  Pond. 

No.  25.  —  Letter  from  Chas.  Hunter  &  Co. 

No.  26.  —  Fill  this  order  from  D.  W.  Perry  &  Co.,  taking  3X  flour,  $5.25,  and  Pastry 
flour,  35.50,  from  your  own  merchandise;  C.  E.  peas,  $  1.30  ;  E.  J.  peas,  $  1.50  ;  beans,  $1.20, 
from  lot  W-i.  Draw  a  draft  at  60  days  from  the  date  of  the  bill,  and  present  it  to  your 
teacher  for  acceptance.  He  will  accept  the  draft  for  D.  \V.  Perry  &  Co.  Make  the  proper 
journal  entry,  and  place  the  acceptance  in  the  Cash  Drawer. 

No.  27.  —  Take  order  No.  19,  A.  W.  Noone  &  Co.,  from  your  Voucher  File  and  make  a 
bill  of  the  goods  called  for,  taking  20  brls.  Redcloud  at  54-75  per  brl.  and  20  brls.  Snow- 
flake  at  S4.90  per  brl.  from  Fischer  Flour  Co.'s  consignment  No.  i,  and  10  brls.  apples  at 
53.75  pc  l^rl.  from  E.  Mason  &  Co.'s  consignment  No.  2. 

No.  28.  —  Sales  from  blotter. 

No.  29.  — Cashier's  payments.     Make  out  checks  for  the  amounts  required. 

Carry  all  consignment  sales  from  the  sales  book  to  the  consignment  ledger,  and  all  con- 
signment and  shipment  items  from  the  credit  side  of  the  cash  book  to  the  consignment  ledger. 

Prove  the  cash  and  post  as  heretofore.  Open  new  debtor  accounts  on  page  7,  allowing 
one-fourth  of  a  page  to  each. 

July   19 

No.  30.  —  Render  an  account  sales  of  lot  \V-i,  and  place  the  net  proceeds  to  the  credit 
(if  the  Western  New  York  Preserving  Company,  subject  to  sight  draft.  In  this  case  no 
check  has  been  sent  for  the  net  proceeds,  but  an  account  will  be  opened  with  the  Western 
New  York  Preserving  Company  in  your  general  ledger.  Write  Plaeed  to  credit  opposite  Xet 
Proceeds  on  the  loose  leaf.  Enter  in  your  account  sales  register  as  usual,  and  write  the 
amount  to  be  credited  in  the  proper  column.  The  net  proceeds  will  be  posted  later  from 
the  account  sales  register. 


204  MuDt-RN    ILLUSTRATIVE   BuuKKLtrLW. 

No.  31.  — Check  from  the  Public  Market  Co.,  to  pay  the  balance  due  to  July  i. 

No.  32.  -    Check  from  G.  H.  Tucker  &  Co.,  to  pay  the  balance  due  to  July  i. 

It  is  not  m;ce.ssary  to  send  a  receipt  for  a  check,  since  the  check  itself  when  paid  by  the  bank  will  be  car.- 
celed  and  returned  to  the  maker,  and  thus  show  that  the  amount  has  been  paid  to  the  person  in  whose  favor  it 
was  made;  but  it  is  customary  in  most  business  houses  to  acknowledge  the  receipt  of  every  remittance  in  souk 
form.     If  a  statement  or  invoice  accompanies  the  remittance,  it  should  be  receipted  and  returned.     If  the  stat> 
mcnt  or  invoice  is  not  received  with  the  remittance,  an  acknowledgment  should  be  sent. 

No.  33. — The  Traders  Bank  presents  Chas.  Hunter  &  Co.'s  draft  at  sight.  Accept  it 
by  writing  Accepted,  July  ig,  ig — ,  payable  at  Traders  Bank  across  the  face,  and  place  in 
Vouchers  for  Others.  In  business,  the  draft  would  be  returned  to  the  bank,  and  the  amount 
would  be  deducted  from  your  balance  on  deposit,  and  the  draft  would  come  back  to  you 
when  your  vouchers  are  returned  to  you  by  your  bank.  Make  an  entry  on  the  stub  of  your 
check  book  immediately  below  the  record  for  the  last  check  as  follows :  "7/9  — .  Chas. 
Hunter  &  Co.'s  d/t.  joo,"  placing  the  amount  in  the  money  column  to  be  added  with  the 
checks.     Enter  in  the  cash  book,  debiting  Const.  Hunter  &  Co.  Xo.  i. 

Some  banks,  in  a  case  like  the  above,  or  where  a  note  or  time  draft  is  made  payable  at  the  bank,  would 
require  the  drawee  of  tlit  draft,  or  the  maker  of  the  note,  to  meet  the  obligation  by  check. 

No.  34.  —  Sales  for  the  day  as  per  blotter. 
No.  3.5.  — Cashier's  payment  for  the  day. 

No.  36.  — This  invoice  has  been  received  from  Dock  &  Coal  Co.,  for  your  order  given  to 
the  salesman  of  the  house,  who  has  recently  called  upon  you. 

Prove  the  cash  and  post.  Open  new  creditor  accounts  on  page  11,  allowing  one-fourth 
of  page  to  each. 

July  20 

No.  37.  —  .Ship  to  J.  M.  Marsh  &  Co.,  Boston,  Mass.,  to  be  sold  on  commission,  25  b.xs. 
cheese,  2625  lbs.,  at  12^;   25  tubs  butter,  1500  lbs.,  at  21^.     Pay  insurance,  S1.50,  in  cash. 

No.  38.  —  .Sliip  to  \V.  A.  .Simonds  &  Co.  to  be  sold  on  commission  1000  bu.  potatoes  at 
62!.^^,  and  jmy  for  insurance,  $1.25. 

No.  39.  —  Draw  at  30  days,  on  J.  M.  Marsh  &  Co.,  for  S300,  and  place  the  draft  in 
Traders  Bank  for  collection.  Make  journal  entry,  crediting  Shipments  and  debiting  Notes 
Receivable,  since  it  is  understood  that  Marsh  &  Co.  will  accept  the  draft;  also  credit 
Shipment  to  J.  M.  Marsh  &  Co.  in  shipment  ledger  for  S300.  Make  no  entry  on  the  stub 
of  the  check  book.  .Vn  entry  will  be  made  in  the  back  part  of  your  bank  pass  book  by  the 
teller  under  the  head  of  collections.  When  the  draft  is  collected  you  will  receive  credit 
for  it  the  same  as  for  a  deposit,  and  you  will  then  enter  it  on  the  stub  of  the  check  book. 

No.  40.  —  Memorandum  of  advice  from  the  Iowa  Packing  Co. 

No.  41.  —  I-"ill  this  order  from  Fischer  Plour  Co.'s  consignment  —  Redcloud,  S4.75, 
Snowfiake,  S4.90. 

No.  42.  —  Sales  from  blotter. 

No.  43.  —  Render  an  account  sales  of  the  Fischer  Flour  Co.'s  consignment,  and  send 
them  a  check  for  the  net  proceeds,  less  draft  for  S300  accepted  July  17. 

No.  44.  —  Invoice  from  Curtice-Olney  &  Co. 

No.  45. —  Invoice  from  Russell  &  Birkett. 

No.  46   —  Cashier's  payments. 


SHIPPING   AND    COMMISSKJX    iiUSINESS  205 

No.  47.  —  Check  from  the  City  Hotel  Co.,  for  the  amount  due  July  i,  less  sfe-  (See 
model  in  the  cash  book,  page  190.) 

No.  48.  —  Deposit  all  cash  and  checks  on  hand. 

Prove  your  cash,  and  post.  Allow  one-fourth  of  a  page  for  new  accounts,  lie  sure  to 
open  them  in  the  proper  sections  of  the  ledger. 

July  23 

No.  49.  —  This  check  has  been  received  in  payment  of  bill  of  July  16,  less  3  %  on  the 
part  of  the  sale  which  was  made  from  your  own  merchandise.  See  if  the  check  is  for  the 
correct  amount,  and  if  so,  enter  it  in  your  cash  book.  Debit  Mercliatidise  Discount  for 
the  difference  between  the  amount  of  the  check  and  the  amount  of  the  bill. 

No.  50. — This  check  is  in  payment  of  bill  of  the  17th,  less  3%  on  that  part  which  was 
taken  from  your  own  merchandise.     (Enter  as  in  No.  49.) 

No.  51.  —  Memorandum  of  shipment  by  the  Fischer  Flour  Co.,  under  an  order  bill  of 
lading,  with  the  accompanying  sight  draft  for  $500,  which  is  presented  by  your  bank. 
.Accept  the  sight  draft  and  make  entry  on  stub  of  check  book,  similar  to  that  for  transaction 
No.  33.  Enter  in  your  cash  book,  debiting  Const.,  Fisclicr  No.  2  advance  payment.  Enter 
the  goods  on  a  loose  leaf,  with  the  stencil  mark  F-2.  Opposite  Advances,  in  the  debit  col- 
umn, write  the  amount  of  the  sight  draft  you  have  accepted. 

For  an  explanation  and  illustration  of  tlie  order  bill  of  lading,  see  Appendix  II,  Bills  of  Lading.  Note  care- 
fully the  difference  between  the  form  and  use  of  the  order  bill  of  lading  and  the  straight  bill. 

When  goods  are  shipped  under  an  order  bill  of  Lading,  the  usual  notice  of  the  arrival  of  the  goods  is  sent 
.md  the  receipt  forms  are  made  out  by  the  railroad  company,  but  the  goods  are  delivered  only  on  presentation 
>f  the  bill  of  lading,  properly  indorsed,  and.  of  course,  the  payment  of  freight  charges,  if  any. 

In  No.  51,  after  vou  had  accepted  the  draft,  which  in  this  case  was  equivalent  to  issuing  your  check  for  the 
amount,  the  bank  would  indorse  the  bill  of  lading  to  E.  H.  Reed  &  Co.,  which  would  give  you  title  to  the  goods, 
and  enable  vou  to  get  them  from  the  railroad  company. 

No.  52.  —  Memorandum  from  Rice  &  Pond. 

No.  53.  —  Render  an  account  sales  to  Rice  &  Pond  for  consignment  No.  2,  which  is  sold 
out,  and  send  them  a  check  for  the  net  proceeds. 

Close  the  consignment  in  your  consignment  ledger,  and  remove  the  leaf   from  the  book. 

No.  54.  —  This  draft  on  you  by  the  Western  New  York  Preserving  Co.  is  presented  by 
the  bank.     Accept  the  draft. 

No.  55.  —  Fill  this  order  from  Theo.  Crosby  &  Co.,  taking  apples,  $3-75  per  brl.,  butter, 
24^  per  lb.  from  Mason's  consignment  No.  2,  and  XXX  flour,  $5.25  per  brl.,  XX  flour, 
$5  i)er  brl.,  Pastry  flour,  $5.50  per  brl,  from  your  own  merchandise.  Do  not  fail  to  write 
the  stencil  number  of  the  consignment  opposite  the  items  in  the  sales  book  that  are  taken 
from  Mason's  consignment,  and  enter  these  amounts  on  the  credit  side  of  the  loose  leaf  in 
the  con.signment  ledger. 

No.  56.  — Sales  of  the  day  from  the  blotter. 

No.  57.  —  Cashier's  payments  for  the  day.     Be  careful  in  calculating  your  discounts. 

Prove  the  cash,  and  post. 

July  24 

No.  58.  —  Invoice  from  Dock  &  Coal  Co. 

No   59. — Check    from    F.  H,  Larkin   &   Co.,  with   an   account   sales   of   shipinent  sent 


206  MODERN   ILLUSTRATIVE   BOOKKEEPING 

them  the  17th.  Enter  in  your  cash  book,  placing  the  amount  in  the  Shipments  column,  and 
post  to  shipment  ledger  in  credit  column.     Close  this  shipment  account. 

No.  60.  — Check  from  the  National  Market  Co.  in  payment  of  bills  of  July  17  and  18. 
less  3  %  on  the  part  of  the  bills  which  have  been  sold  from  your  own  merchandise. 

No.  61. — -Take  from  your  Cash  Drawer,  D.  W.  Ferry  &  Co.'s  acceptance  at  sixty  days 
from  July  18,  for  S220.25,  and  have  it  discounted  at  the  bank.  (Prepare  discount  slip  as 
usual.)  Notice  that  the  draft  is  not  discounted  for  60  days,  but  for  the  time  it  has  to  run. 
See  that  the  net  proceeds  are  placed  to  your  credit  in  your  bank  pass  book.  Enter  in  your 
cash  book  and  on  the  left-hand  stub  of  your  check  book. 

No.  62.  —  Memorandum  of  goods  received,  freight  paid,  from  the  Western  New  York 
Preserving  Co. 

No.  63.  —  Render  an  account  sales  of  consignment  received  from  the  Iowa  Packing 
Co.,  and  remit  net  proceeds  by  New  York  draft,  for  which  you  will  pay  25  ^  (see  No.  21  j. 
Make  the  check  for  amount  of  draft  and  exchange.  Indorse  the  draft  properly,  and  inclose 
it  with  the  account  sales  in  an  envelope  addressed  to  the  Iowa  Packing  Co. 

No.  64.  —  Sales  as  per  blotter. 

No.  65.  —  Ship  to  Warren  Jordan,  New  York,  to  be  sold  on  commission,  i  50  brls.  apples 
at  S2.75,  800  bu.  potatoes  at  55  ^'. 

No.  66.  —  Cashier's  payments  for  the  day. 

Prove  the  cash,  and  post. 

JULV    25 

No.  67.  —  Memorandum  of  shipment  by  the  Iowa  Packing  Co.,  under  an  order  bill  of 
lading,  with  the  accompanying  sight  draft,  which  is  presented  by  the  Traders  Bank  (see 
No.  54). 

No.  68.  —  Memorandum  of  shipment  from  Edwin  Mason  &  Co.  ( M-3). 

No.  69.  —  Send  500  bu.  potatoes  at  55^,  and  10  tubs  butter  at  21  >^,  to  F.  H.  Larkin  & 
Co.,  Northboro,  to  be  sold  on  commission.     Take  these  goods  from  your  own  merchandise. 

No.  70.  —  Deposit  all  checks  on  hand. 

No.  71.  —  Order  received  from  1).  W.  Pcrrv  &  Co.  p-ill  order  as  usual,  taking  apples  at 
S  3.50  and  butter  at  22  ^  from  H-i  ;   plums  at  S  1.50  and  peaches  at  Si. 75  from  W-2. 

No.  72.  —  Sales  from  blotter. 

No.  73.  —  Cashier's  payments  for  the  day.  Make  out  a  check  for  the  bill  for  building 
stable,  and  pay  the  freight  bills  in  cash.  Do  not  forget  to  charge  each  consignment  and 
each  shipment  with  its  freight  bill.  To  what  account  would  you  charge  the  check  given 
for  building  the  stable  .' 

No.  74.  —  Render  an  account  sales  of  Edwin  Mason  &  Co.'s  consignment  No.  2,  and 
send  them  the  net  proceeds  by  New  York  draft.  Make  out  a  check  for  the  amount  of  the 
draft  and  50  ^  exchange. 

Prove  the  cash,  and  post. 

JuLV  26 

No.  75.    -  Invoice  from  Gillette  &  Hennigan. 

No.  76.  — Fill  D.  W.  Perry  &  Co.'s  order,  taking  oranges  at  $6.  lemons  at  S4.75,  pine- 
apples at  S  1.80,  from  your  own  merchandise  ;   plums  at  S  1.50,  cherries  at  S  1.50,  from  W  2. 


SHIPPING   AXU   COMMISSION    BUSINESS  207 

No.  77.  —  This  order  is  received  from  G.  H.  Tucker  &  Co.,  and,  as  requested,  you  will 
draw  a  sight  draft  for  the  amount  of  the  bill.  Fill  the  order,  less  3  %,  taking  goods  from 
your  own  merchandise  —  pineapples,  $i.So;   lemons,  S4.75;  cheese,  IS^';  ketchu]5,  $2.50. 

Since  the  sale  is,  in  effect,  for  cash,  you  allow  them  a  discount  of  3  %.  Draw  the  draft 
and  place  it  in  your  Cash  Drawer  for  deposit  at  the  close  of  the  day  with  other  drafts  and 
checks  received.  Enter  the  amount  in  your  cash  book  the  same  as  though  you  had  received 
a  check,  and  check  off  the  debit  entry  in  the  sales  book  and  the  credit  entry  in  the  cash 
book. 

No.  78.  —  Memorandum  of  sundry  small  sales  made  from  your  own  merchandise  (see 
No.  16.) 

No.  79.  —  Letter  from  Russell  &  Birkett,  inclosing  a  draft.      Accept  this  draft. 

No.  80.  —  Check  from  the  City  Hotel  Co.  in  payment  of  bills  of  July  16  and  17. 

No.  81.  —  Cashier's  payment.      Pay  the  freight  on  Gillette  &  Hennigan's  invoice  in  cash. 

No.  82.  —  Deposit  sight  draft  of  G.  H.  Tucker  &  Co.  and  check  of  City  Hotel  Co.  Enter 
the  sight  draft  on  your  deposit  slip  under  C/iccks,  with  the  explanation,  Sight  draft,  opposite 
the  amount. 

The  acceptance  of  the  sight  draft  on  G.  H.  Tucker  &  Co.  by  the  bank  as  a  deposit  was  by  agreement  with 
the  cashier.  The  draft  is  treated  as  a  check,  and  if  not  paid  will  l)e  charged  Iwck  to  you  by  the  bank.  This  is 
not  a  common  practice,  but  wliere  the  depositor  is  responsible  and  his  account  is  satisfactory,  some  banks  will 
e.xtend  this  courtesy. 

Prove  the  cash,  and  post. 

Jui.v  27 

No.  83.  —  Return  10  tubs  of  butter  received  from  Chas.  Hunter  &  Co.,  as  it  is  found 
upon  examination  to  be  unfit  for  your  trade. 

This  transaction  requires  an  entry  in  your  consignment  ledger.  Under  Snlts  write  10 
tubs  butter  returned,  600  lbs.  Write  a  letter  to  Hunter  &  Co.,  telling  them  why  the  goods 
have  been  returned. 

No.  84. —  Render  an  account  sales  to  Rice  &  Pond  for  consignment  No.  3.  -Send  them 
a  check  for  the  net  proceeds. 

No.  85. —  Sales  from  blotter. 

No.  86.  —  Cashier's  payments.     Pay  these  amounts  in  currency. 

No.  87.  —  Check  from  A.  W.  Noone  &  Co.  for  invoice  of  the  i8th  inst. 

No.  88.  —  Check  from  E.  B.  Dean  &  Co.,  in  payment  of  bill  of  the  17th,  less  3  %  discount 
on  that  part  of  the  bill  taken  from  your  own  goods. 

No.  89.  —  Render  an  account  sales  to  Chas.  H miter  &  Co.,  and  place  the  net  proceeds 
to  their  credit.  Enter  in  Packages  Returned  colimin  of  the  account  sales  register  the  10 
tubs  butter  returned  July  27. 

No.  90.  —  Account  sales  of  shipment  to  J.  M.  Marsh  &  Co. 

No.  91.  — .^n  account  sales  from  W.  A.  Simonds  &  Co.,  New  York,  with  cashier's  check 
for  your  net  proceeds.  A  cashier's  check  answers  the  same  purpose  as  a  bank  draft.  Note 
closely  the  form  of  the  check. 

No.  92. — Your  acceptance  of  July  17,  favor  Fischer  Flour  Co.,  is  due  this  day  at 
Traders  Bank. 

No.  93.  —  Deposit  all  checks  and  cash  on  hand. 


208 


MODERN   ILLUSTRATIVE   BOOKKEEPING 


Statement  of 
Ward  and  Gray 


Expense 

Real  Estate 

Furniture  and  Fixtures 

Horses  and  Wagon 

Office  Supplies 

Discount 

Gain  from  the  business 


Interest  due  Geo.  Ward 

••     A.  H.  Gray 

Geo.  Ward,  Vi  net  gain 

A.  H.  Grav.  ]i  net  gain 


cost 

no  j 

insurance  unexpired 

4S!68 

64 

32 

cost 

7200 

valued  at 

7050 

150 

cost 

200 

valued  at 

'75 

1 

-5  1 

cost 

275 

valued  at 

250 

^5 

cost 

35 

valued  at 

30 

5 

excess  of  debits 

2 
469 

40 
52 

741     24 

'3 

26 

12 

7« 

25    97 

221 

78 

221 

77 

443 

55 

469 

52 

• 

Prove  the  cash,  and  post  all  unchecked  original  entries. 

Before  proceeding  further,  turn  to  pages  199  and  200  and  carefully  read  the  explana- 
tions given  there  of  the  various  books  used  in  this  set. 

Closing  Books  of  Original  Entry.  —  Rule  and  foot  the  journal,  cash  book,  sales  book,  in- 
voice book,  shipment  ledger,  and  account  sales  register  in  accordance  with  the  models  shown 
on  preceding  pages. 

Final  Posting. -Vou  will  now  post  to  the  general  ledger  the  footings  of  the  special  col- 
umns of  your  books  of  original  entry,  in  accordance  with  the  following  instructions. 

Cash  Book.  —  Debit  side.  Post  the  footing  of  the  Mdse.  Dis.  column  to  the  debit  of 
Merchandise  Discount. 

Post  the  footing  of  the  Shipments  column  to  the  credit  of  Shipments. 

Credit  side.  Post  the  footing  of  the  Mdse.  Dis.  column  to  the  credit  of  Merchandise 
Discount. 

Post  the  footing  of  the  Shipments  column  to  the  debit  of  Shipments. 

Post  the  footing  of  Consignments  column  to  the  debit  of  Consignments. 

Sales  Book.  —  Post  the  footing  of  Sales  from  Consignments  column  to  the  credit  of  Con- 
signments. 

Post  the  footing  of  Sales  from  Mdse.  column  to  the  credit  of  Merchandise. 

Invoice  Book.  — Post  the  footing  to  the  debit  of  Merchandise. 

Shipment  Ledger.  —  Post  the  footing  of  the  Mdse.  column  to  the  debit  of  Shipments  and 
to  the  credit  of  Merchandise. 
^     Account  Sales  Register.  —  Post  the  footing  of  the  .■\mount  to  be    Posted  column  to  the 


SHIPPING   AND    COMMISSION    liLNlNESS 


2  Oil 


Losses  and  Gains 
July  31,   19— 


Shipments 


Merchandise 


Mdse.  Discount 

Commission 

Cliarges 


Gain  from  the  business  brouirlit 


received  from  sales 
vahie  of  unsold 

cost 

sales 

value  of  unsold 

cost 

freight 

excess  of  credits 


6844  30 
HS'30 


down 


2800 

I44S 


4245 
4115 


4461 
2747 


7208 
6959 


75 

75 

42 

'30 

27 

38 

65 

60 

249 

215 

122 

23 

33 


°5 

68 
47 
71 


741 
4'-y 


469 


-4^ 
5^ 


il 


debit  of  Consignments,  and  the  Commission  and  Charges  amounts  to  the  credit  of  their  re- 
spective accounts. 

Your  posting  is  now  completed,  but  you  should  check  back,  to  be  certain  that  there  are 
no  errors  or  omissions. 

Take  a  trial  balance  and  submit  it  to  your  teacher  for  approval. 

You  have  the  following  goods  on  hand  : 

Inventories,  July  31,   19 — 


50  brls.  Apples,  53-50 

94  doz.  C.  Beans,  i. 

7  tubs  Butter,  420  lbs.,  .21 

27  bxs.  Cheese,  2735  lbs.,  .11 

72  bxs.  C.  Corn,  1.05 

105  brls.  3X  Flour,  4.50 

70     "     2X  Flour,  4.25 

55     "     Pastry  Flour,  4.75 

30  doz.  Ketchup,  2. 

Other  inventories:  Real  estate,  estimated  to  be  worth  S9700;  Unearned  premium  on 
insurance  policy,  $45.83;  Office  supplies  on  hand,  S35;  Furniture  and  fixtures,  valued  at 
$225;   Horse  and  wagon,  valued  at  $292.50. 

Unsold  shipments,  valued  at  cost  as  shown  by  the  shipment  ledger,  $1278.10. 

Statement  of  Losses  and  Gains.  —  Make  a  statement  of  losses  and  gains  of  the  business, 
using  the  model  on  pages  208  and  209  as  a  guide  to  the  arrangement  of  the  items,  ruling,  etc. 


16  bxs.  Lemons, 
5     "     Oranges, 
72  doz.  C.  Peas, 
3  brls.  S.  Pickles, 
3     "     Sw.  Pickles, 
4S9  bu.  Potatoes, 

I  doz.  Pineapples, 
133     "     C.  Tomatoes, 


5- 
.85 

7- 
9- 

.621^ 
1.20 
•95 


210 


MODERN   ILLUSTRATIVE   BOOKKEEPING 


Statement  of 
Ward  &  Gray 


Real  Estate 

Expense 

Office  Supplies 

Horses  and  Wagon 

Shipments 

Merchandise 

Furniture  and  Fixtures 

Cash 

Notes  Receivable 

Accts.  Receivable 

Consiirnments 


valued  at 

7050 

1 

insurance  unexpired 

45 

68 

valued  at 

30 

250 

.. 

1445 

75 

'■ 

2747 

38 

'• 

•75 

in  bank 

'795 

60 

notes  on  hand 

'    375 

personal  debit  balances 

3446 

48 

advances  made  in  excess  of  sales 

520 

17880 

89 

Total  resources 

17880 

S'.i 

1 

Note  th;it  the  arrangement  of  the  accounts  in  the  statement  is  slightly  different  from 
the  form  used  in  the  Introductory  Course.  Merchandise  not  being  the  leading  account  in 
this  business  from  which  the  ])rincipal  profit  is  derived,  it  is  not  given  the  leading  position 
in  the  statement  as  heretofore,  but  is  placed  with  such  other  accounts  as  Shipments,  Com- 
mission, and  Charges,  all  of  which  are  prominent  sources  of  income. 

In  this  set  you  have  kept  a  number  of  subordinate  accounts.  For  instance.  Freight 
account  is  really  a  part  of  the  Merchandise  account,  but  has  been  kept  separately  to  show 
definitely  on  the  face  of  the  ledger  the  amount  of  that  item  of  cost  on  your  goods. 

In  entering  the  Merchandise  account  on  the  Loss  and  Gain  Statement,  the  freight  must 
be  considered  as  a  part  of  the  cost  of  your  goods. 

Other  subordinate  accounts  are  F"urniture  and  Fi.xtures,  Horses  and  Wagon,  and  Ofifice 
Supplies.  These  are  really  expense  accounts,  but  by  keeping  separate  accounts  with  these 
items,  the  losses  of  the  business  are  shown  in  greater  detail.  They  may  be  closed  sepa- 
rately as  shown  on  the  statement. 

Still  other  items  of  expense,  with  which  separate  accounts  are  sometimes  kept,  are  Rent, 
Wages,  Insurance,  Advertising,  and  Postage.  In  fact,  a  separate  account  may  be  kept 
with  any  item  which  occurs  frequently  or  is  of  sufficient  importance  to  make  it  desirable  to 
know  what  it  amounts  to  in  any  period.  All  these  accounts,  being  identical  in  nature  with 
the  K.\i)ense  account,  are  treated  in  the  same  manner. 

After  all  accounts  showing  losses  or  gains  have  been  entered  in  the  Loss  and  Gain 
Statement,  the  difference  between  the  two  sides  will  show  the  net  gain  or  loss  from  the 
business.  Enter  this  on  the  smaller  side,  close  the  statement,  and  drop  the  gain  or  loss 
from  the  business  below  the  rulings  and  to  the  opposite  side. 

According  to  agreement,  each  partner  is  to  receive  interest  on  his  net  investment  at 
the  legal  rate.  This  equalizes  in  part  their  investments  and  also  makes  it  possible  to  show 
on  the  records  how  much  of  the  net  gain  as  shown  by  the  statement  is  creditable  to  the 
capital  itself,  and  how  much  to  the  handling  of  that  capital  in  the  conduct  of  the  business 
by  the  firm.  I'ind  the  interest  on  K.  II.  Reed's  investment  as  shown  by  his  account  in  the 
ledger  for  31  days,  the  length  of  time  it  has  been  invested  in  the  present  business.     Find 


SHirPIXG    AND    COMMISSION    BUSINESS 


:u 


Liabilities  and  Resources, 
July  31,   19— 


Notes  Payable 
Accts.  Payable 

Geo.  Ward 
A.  II.  Gray 

notes  outstanding 

personal  credit  balances 

total  liabilities 

net  in\-estment                       2652. 

interest                                      13.26 

4000 
8217 

37 

12217 
2887 
2776 

266; 
221 

26 

78 

37 

}i  net  gain 

present  worth 

net  investment                      2542. 

interest                                         12.71 

2554 
221 

7' 

77 

04 

'4  net  gain 
present  wortli 

Total  liabilities  and  present  wortli 

48 

17880 

89 

the  interest  on  Student's  investment  in  the  same  manner.  Enter  the  amounts  of  these 
interests  on  the  debit  side  of  the  statement  as  shown  in  the  form.  Deduct  the  sum  of  the 
interests  from  the  gain  from  the  business,  and  the  remainder  will  be  the  net  gain.  Divide 
this  gain  equally  between  the  partners  and  close  the  statement. 

Statement  of  Resources  and  Liabilities.  —  Make  a  statement  of  resources  and  liabilities  of 
the  business,  using  the  model  on  pages  210  and  211  as  a  guide. 

The  debit  side  of  this  statement  comprises  cash  and  the  various  accounts  having  in- 
ventories, followed  by  Notes  Receivable,  Accounts  Receivable,  and  Consignments.  Ac- 
counts Receivable  includes  all  personal  accounts  showing  debit  balances. 

The  credit  side  of  the  statement  contains  the  debts  due  by  the  firm  on  notes  and  on  accounts, 
the  latter  being  designated  as  Accotmts  Payable,  also  the  present  worth  of  the  partners. 

Submit  vour  statements  to  }'our  teacher  for  approval  before  closing  the  ledger. 

No.  94.  —  Bank  voucher  slip.  Enter  the  amount  of  the  slip  on  the  credit  side  of  your 
pass  book,  and  balance  and  rule  up  the  book. 

Take  your  checks  from  the  file  and  compare  them  with  the  slip  ;  place  a  check  mark 
against  each  item  as  it  is  found  to  agree  with  the  check.      Return  the  unpaid  checks  to  the  file. 

Cancel  the  paid  checks  by  writing  Paid  across  the  face  of  each,  and  then  compare  them 
with  the  amounts  on  the  check  stubs,  checking  each  amount  for  which  you  have  a  canceled 
voucher.  The  unchecked  amounts  represent  unpaid  checks.  Place  the  canceled  checks  in 
\'()ucher  File.      Reconcile  xowx  bank  balance.     (See  Reconciling  Bank  Balance,  jiage  194.) 

Instead  of  writing  up  the  depositor's  pass  book  in  detail,  as  \va,s  formerly  the  general  custom,  many  banks 

now  list  the  charge  items  on  a  strip  of  paper  by  means  of  the  adding  machine,  and  enter  only  the  total  and  the 

I     balance  in  the  pass  book.     Other  banks  render  regular  montlily  statements  to  their  depositors,  the  forms  of 

which  vary.     Some  of  these  statements  are  in  envelope  form,  and  show  on  the  outside:   the  deposits  in  detail; 

elites  of  same  ;  total  credits,  including  previous  balance  ;  total  debits  ;  and  present  balance.      The  vouchers  are 

■     inclosed  in  the  envelope,  but  no  detailed  statement  of  them  is  giv-en.     .■\nother  form  of  statement,  and  one  whicli 

:     is  much  appreciated  by  depositors,  is  similar  to  the  monthly  statement  of  business  concerns.     The  charge  items 

are  listed  in  detail  and  footed  under  Vouchers,  on  the  left  side  of  the  form,  and  the  credits,  balance,  deposits  — 

dates  and  amounts  —  are  listed  under  deposits  on  the  right  side.     This  side  also  shows  the  total  credits,  total 

debits,  and  balance.     This  work  is  also  done  on  the  adding  machine,  and  the  vouchers  are  returned  with  the 

statement. 


212  MODERN    ILLLSTKATU  K    BO<jKKEEPING 

Closing  the  Ledger.  —  Close  all  loss  and  gain  accounts  as  usual.  Before  closing  Mer- 
chandise account,  Freight  account  should  be  closed  into  it;  on  the  credit  side  of  Freight 
account  write  in  red  ink  Mcicltandise,  with  date,  amount  of  debit  side,  and  page  of  the  Mer- 
chandise account.  Rule,  foot,  and  transfer  the  amount  to  the  debit  side  of  Merchandise  in 
black  ink,  writing  Firix/i/,  date,  and  page  of  Freight  account. 

Shipments  account  is  closed  on  the  same  principle  as  the  Merchandise  account,  but  the 
freight  on  shipments  is  already  included  in  the  debit  side,  having  been  so  charged  on  the 
credit  side  of  cash  book. 

Before  closing  an  account,  carefully  inspect  the  list  of  inventories  to  see  if  the  account 
has  an  inventory.  If  it  has,  be  sure  to  enter  the  inventory  in  the  account  before  closing  it 
into  Loss  or  Gain.  Compare  your  Loss  and  Gain  account  in  the  ledger  with  the  Loss  and 
Gain  Statement  as  you  proceed. 

Consignments  account  does  not  show  a  loss  or  gain,  therefore  is  not  a  loss  and  gain 
account,  and  need  not  be  closed.  The  profits  arising  out  of  consignments  are  shown 
through  the  Commission  and  the  Charges  accounts.  These  accounts  are  closed  into  Loss 
and  Gain  account. 

After  all  loss  and  gain  accounts  have  been  closed  into  Loss  and  Gain  account,  close  the 
Loss  and  Gain  account  by  writing  on  the  debit  side  in  red  ink  Gain  from  business  and  the 
difference  between  the  two  sides.  See  that  this  difference  agrees  with  your  Loss  and  Gain 
Statement.  Rule  and  foot,  and  droj:!  the  Gain  front  business  to  the  credit  side  of  the  ac- 
count in  black  ink. 

As  each  partner  is  to  be  allowed  interest  on  his  capital  out  of  the  profits  of  the  business, 
their  accounts  should  now  be  credited  for  the  interest  thus  allowed.  Make  a  journal  entry 
crediting  each  partner  for  the  interest  as  heretofore  determined,  and  debit  Loss  and  Gain 
for  the  amount,  and  post  the  entry.  Now  close  the  Loss  and  Gain  account  in  the  usual  way. 
Rule  and  foot  the  account.  Transfer  the  net  gain  to  the  credit  side  of  the  partners' 
accounts,  and  close  the  accounts  in  the  usual  way,  bringing  the  Present  Worth  of  each  below 
the  rulings. 

It  is  the  practice  of  many  bookkeepers  and  accountants,  especially  in  large  concerns,  to  close  the  books 
through  the  journal,  instead  of  making  transfer  entries  directly  in  the  accounts  on  the  ledger,  on  the  principle 
that  "no  entry  should  be  made  in  the  ledger  except  through  an  original  book  of  entry."'  The  method  ot  closing 
the  books  by  passing  the  entries  through  the  journal  will  be  explained  later. 

Take  a  proof  trial  balance  of  the  ledger. 

Hand  your  books  and  papers  to  the  teacher  for  inspection. 

EXERCISES 

Note. — Accounts  sales  in  these  exercises  are  to  be  prepared  on  foolscap  paper,  properly  ruled,  and  the 
trial  balances  and  statements  on  loose  journal  paper.     The  forms  and  dates  are  to  be  supplied  by  the  student. 

1.  Received  from  Klem  &  Co.,  Boston,  to  be  sold  on  their  account,  50  crates  Bermuda 
onions;  paid  freight  and  cartage,  S5.90;  sold  20  crates  at  S2.60;  30  crates  at  S2.50;  com- 
mission, 5  % ;  storage,  S  2.50.    Proceeds  credited,  subject  to  sight  draft.    Render  account  sales. 

2.  Received  from  C.  L.  Johnson  &  Company,  Charlotte,  to  be  sold  on  their  account, 
50  brls.  Baldwin  apples,  75  brls.  Greening  apples.  Paid  freight  and  cartage,  $16.32;  sold 
25  Baldwins  at  $4  a  brl. ;  20  at  S4.25  ;  5  at  S4.50;  sold  50  Greenings  at  $4.50;  25  at 
$4.75;  commission,  5%;  cold  storage,  $6.25;  cooperage.  Si.  Proceeds  remitted  b\ 
N.  Y.  draft,  less  exchange  50 J^.     Render  an  accoimt  sales. 


SHIPriXG   AND    COMMISSION    ISUSIXESS  213 

3.  Shipped  to  James  Goodman  &  Son,  Chicago,  to  be  sold  on  your  account,  40  crates 
celery,  freight  prepaid,  $7.50.  Sold  10  crates  at  $2. 50;  24  at  $2.25;  5  at  $2;  i  crate 
spoiled,  no  sale.  Commission,  4 7f  ;  guarantee,  1%;  cartage,  75''.  Proceeds  received  by 
Chicago  draft,  less  exchange  50^^  Prepare  the  invoice  of  shipment  and  the  account 
sales. 

4.  The  Empire  Trading  Company,  Cincinnati,  received  from  the  Newman  Mfg. 
Company,  Little  Falls,  to  be  sold  on  commission,  100  cases,  assorted  prints.  Freight  and 
cartage,  $37.50,  paid  by  the  consignee.  The  goods  were  sold  in  four  lots,  as  follows:  25 
cases  at  $24.75;  ^5  cases  at  $25.25;  30  cases  at  $25;  20  cases  at  $26.25.  Commission, 
7.^%;  insurance,  Ifo]  advertising,  $5.  Advance  payment  by  sight  draft,  $150,  and 
proceeds  paid  by  check.     Render  an  account  sales. 

5.  Giglio  &  Segni,  commission  merchants.  New  York,  received  from  Castelli  &  Pietro, 
Messina,  Italy,  to  be  sold  on  their  account  and  risk,  100  boxes  fancy  oranges,  100  boxes 
choice  lemons.  The  consignees  paid  customs  duties,  etc.,  $57.50;  freight  and  drayage, 
$5.35.  They  sold  the  oranges  at  $3.50  per  box,  and  the  lemons  at  $3.25  per  box.  Their 
charges  were:  commission  5%,  insurance  $2.50,  storage  $2.25,  guarantee  1%;  and  they 
remitted  the  net  proceeds  in  Palermo  funds,  less  exchange,  9.75  liras.  Render  an  account 
sales  in  liras.      (The  value  of  a  lira  is  19.3  cents  in  United  States  money.) 

6.  Beebe  &  Coleman  conduct  a  produce  commission  business.  Each  invested  $2500, 
and  they  share  the  gains  equally.  Reebe  receives  a  salary  of  S80  per  month,  during  the 
five  "season"  months,  for  extra  services.  The  withdrawals  on  private  account  are  limited 
to  $100  a  month,  excepting  during  the  "season"  months,  when  Beebe  may  draw  $  i  50  a 
month.  The  partners'  personal  accounts  are  to  be  adjusted  annually  before  Dec.  31.  The 
books  are  to  be  closed  annually  Nov.  30.  The  investment  accounts  are  to  remain  stationary- 
Following  is  an  abstract  of  the  general  ledger,  Nov.  30,  19 — ,  of  the  above  firm  :  Credits. — 
Commission,  $4895.84;  Sundry  Charges,  $143.92;  Accounts  payable,  $146.97;  W.  H. 
Beebe,  $2500;  T.  R.  Coleman,  $2500.  Debits.  —  Furniture  and  Fixtures,  $575;  Expense, 
$1782.67;  Accounts  receivable,  $2652.18;  Advances,  $346.26;  W.  H.  Beebe,  personal, 
S1475;  T.  R.  Coleman,  personal,  S850.  The  cash  in  bank  and  in  safe  is  $2505.62;  the 
furniture  and  fixtures  are  valued  at  $525. 

From  the  above  data  make  a  trial  balance,  and  prepare  statements  of  loss  and  gains  and 
of  resources  and  liabilities. 

7.  The  statement  of  losses  and  gains  of  Drake  &  Smith,  commission  merchants,  Dec.  31, 
19 — ,  shows  the  following:  Gains.  —  Comtnission,  S 3796.86;  Cartage,  $312.40;  Discount, 
$91.54;  Shipments,  $1320.06;  Merchandise,  $4652.72.  Losses.  —  Rent,  $1200;  Salaries, 
$1875;  Insurance,  $63.75;  Freight,  $119.26;  Interest,  $3i-52;  Furniture  and  F'ixtures, 
$75  ;  General  expenses,  $87.49.  Rule  an  account  form  on  a  sheet  of  cap  paper  and  show 
the  Loss  and  Gain  account  of  the  above  firm  as  it  would  appear  after  the  books  had  been 
closed  for  the  year,  ending  Dec.  31,  19—.  The  partners  share  the  gains  in  the  proportion 
of  Drake  |  and  Smith  |. 

8.  Using  the  model  cash  book,  shown  on  pages  190  and  191,  as  a  guide,  rule  a  form  of 
cash  book  on  loose  journal  paper  which  you  think  would  meet  the  requirements  of  a  purely 
commission  business,  where  the  conditions  are  as  follows  :  Numerous  cash  payments  are 
made  for  freight,  cartage,  and  expense  items ;  a  general  expense  and  separate  freight  and 
cartage  accounts  are  kept ;  a  separate  ledger  is  kept  for  customers'  accounts,  and  payments 
on  these  accounts  are  made  chiefly  in  cash.  Explain  the  advantages  which  you  believe 
your  form  of  cash  book  possesses  over  the  ordinary  form. 


214  MODERN   ILLUSTRATIVK   Iif)f)K KEEPING 

9.  Assume  that  you  have  accepted  a  position  as  bookkeeper  for  E.  A.  Raschke,  produce 
commission  merchant,  and,  upon  taking  charge  of  the  books,  you  find  the  following  condi- 
tions to  exist:  (i)  A  trial  balance  has  not  been  taken  in  several  months;  (3)  the  cash  has 
nut  been  balanced  in  over  two  weeks;  (3)  the  bank  pass  book  has  not  been  written  up  for 
nearly  three  months;  {4)  the  books  consist  of  a  receiving  book,  an  ordinary  form  of  sales 
book,  an  ordinary  form  of  cash  book,  and  a  ledger;  (5)  besides  handling  produce  on  con- 
signment, the  proprietor  buys  and  sells  other  products  on  his  own  account. 

State  what  steps  you  would  take  to  meet  the  first  three  conditions;  what  changes  you 
would  recommend  in  the  boiAs,  either  in  form  or  number  or  both  ;  state  what  accounts  you 
would  keep  in  the  general  ledger,  so  that  the  proprietor  could,  by  reference  to  it,  easily  and 
quickly  determine  at  any  time  the  particulars  regarding  his  business  which  a  commission 
merchant  should  know. 

The  following  exercises  are  given  for  practice  in  schools  which  have  adding  machines. 

10.  Prove  the  charge  postings  to  your  accounts  receivable  accounts  by  listing  on  the 
adding  machine,  first  the  charge  sales  from  your  sales  book,  and  second,  the  debit  footings 
of  the  accounts,  and  comparing  the  footings  of  the  two  lists. 

11.  Prove  the  cRidit  postings  to  vour  accounts  receivable  accounts  by  listing,  first,  the 
credit  payments  from  the  cash  book,  and  second,  the  credit  footings  of  the  accounts,  and 
comparing  the  footings  of  the  two  lists. 

12.  Prove  the  credit  postings  to  your  accounts  payable  accounts  by  listing,  first,  the 
jiurchases  from  your  invoice  book,  and  second,  the  credit  footings  of  the  accounts,  and 
comparing  the  two  footings. 

13.  Prove  the  debit  postings  of  your  accounts  payable  accounts  by  listing,  first,  the 
debit  payments  from  the  cash  book,  and  second,  the  debit  footings  of  the  accounts,  and 
comparing  the  two  footings. 

14.  Prove  the  accounts  receivable  accounts  by  comparing  the  difference  between  the 
debit  and  credit  footings  of  the  lists  obtained  in  exercises  10  and  1 1  with  the  balance  of  the 
accounts  receivable,  as  shown  by  your  statement  of  resources  and  liabilities. 

15.  Prove  the  accounts  ])ayable  accounts  by  comparing  the  difference  between  the  foot- 
ings of  the  lists  obtained  in  exerci-ses  12  and  13  with  the  balance  of  the  accounts  payable,  as 
shown  by  your  statement  of  resourc. s  and  liabilities. 

QUESTIONS 

1.  In  most  lines  of  business,  how  are  goods  usually  marketed? 

2.  In  what  other  way  do  some  producers  and  manufacturers  dispose  of  tlieir  products? 

3.  Define  commission  business,  and  slate  how  a  commission  mercliant  receives  payment  for  his  services. 

4.  Define  consignor,  consignee,  consignment,  shipments. 

5.  Describe  tlie  method  of  marlsing  goods  so  that  it  may  be  known  to  wliat  consignment  they  belong. 

6.  Give  the  rule  for  debiting  and  crediting  Shipmenti. 

7.  Give  the  rule  for  debiting  and  crediting  Consignments. 

8.  What  is  the  consignment  ledger,  and  what  are  the  advantages  of  the  loose-leaf  method  of  keeping 
accounts  with  consignments? 

9.  Define  advances,  and  state  where  they  should  be  entered  in  the  consignment  ledger. 

10.  When  all  the  goods  of  a  consignment  have  been  sold  and  the  entries  of  sales  made  in  the  consignment 
ledger,  how  should  you  proceed  to  close  the  account  in  the  consignment  ledger? 

1 1 .  What  e.\tra  columns  appear  in  the  cash  book  of  this  business? 


SHIPPING    AND    COMMISSION'    r.L'SINKSS  215 

12.  What  are  the  advantages  of  having  special  columns  in  the  cash  book? 

13.  When  should  a  special  column  be  provided  for  an  account? 

14.  How  are  merchandise  discounts  posted? 

15.  What  items  appear  in  the  Shipments  column  on  the  debit  side  of  the  cash  book?     On  the  credit  side? 

16.  What  items  should  appear  in  the  Consignnu-uts  column  of  the  cash  book? 

17.  What  is  the  oliject  of  the  shipment  ledger? 

18.  What  special  columns  appear  in  the  sales  book? 

19.  I  low  are  sales  from  consignments  indicated  in  tlie  sales  book? 

20.  Describe  the  account  sales  register.     What  accoimts  are  posted  from  this  book? 

21.  What  is  a  controlling  account,  and  what  is  the  object  of  such  an  account? 

22.  Name  the  controlling  accounts  used  in  this  set. 

23.  Of  what  ledgers  are  the  controlling  accounts  in  this  set  an  abstract? 

24.  How  d-r,  you  prove  a  ledger  which  has  a  controlling  account? 

25.  Is  this  an  absolute  proof  of  the  accuracy  of  the  work  in  both  the  ledger  and  the  controlling  account? 

26.  Where  should  you  post  the  footing  of  the  Consignments  column  from  the  credit  side  of  the  cash  book? 
27  Where  should  vou  post  the  footing  of  the  Sales  from  Consignments  column  of  the  .sales  book? 

2J.  How  should  you  post  the  Amounts  to  be  Posted  column  of  the  accounts  sales  register? 

29.  What  is  meant  by  "  net  proceeds  "  ? 

30.  Give  a  full  explanation  of  the  Shipments  account. 

31.  Wliat  result  does  the  Shipments  account  show? 
32  Explain  fully  the  Consignments  account. 

;};^.  What  does  the  balance  of  the  Consignments  account  show? 

34.  Wliy  must  Consignments  account  lialance  when  all  consignments  have  been  disposed  of  ? 

35.  Why  does  the  Consignments  account  never  show  a  gain? 

36.  What  accounts  show  the  protits  from  consignments? 

37.  What  is  the  object  of  keeping  a  separate  account  with  P'reight? 

38.  How  should  this  account  be  closed  ?     Why? 

39.  What  is  the  object  of  subdividing  the  Expense  account  into  Furniture  and  Fixtures,  Horse  and  Wagon, 
Office  Supplies,  etc.? 

40.  Name  some  other  accounts  that  may  be  kept  in  this  manner. 

41.  How  may  copies  of  business  papers  be  quickly  made  ? 

42.  Explain  two  methods  of  indexing  ledgers  and  impression  books. 

43.  How  was  the  bank  account  kept  in  this  business  ? 

44.  In  what  ways  may  detailed  records  of  deposits  be  kept  ? 

45.  Explain  how  you  would  reconcile  the  bank  balance. 


WllULHSALli    DRV    GOODS    BUSINESS 

Wholesaling.  —  liuying  and  selling  merchandise  in  bulk,  —  that  is,  by  the  dozen,  gross, 
case,  or  lot,  etc.,  —instead  of  by  the  single  article,  is  called  "  wholesaling."  It  is  a  form  of 
business  activity  which  is  between  manufacturing,  or  producing,  and  retailing,  and  is  an 
important  department  of  commerce.  Some  manufacturers  also  do  a  wholesale  business, 
selling  direct  to  the  retail  trade. 

The  wholesaler  generally  buys  from  the  producer  and  sells  to  the  retailer.     Sometimes  he- 
buys  from  middlemen,  called   jobbers,    selling    agents,    and    commission    merchants,    wli 
act  as  agents  for  others,  generally  manufacturers  or  producers.      Middlemen  derive  their  re\ 
enue  or  profit  chieflv  from  commissions  on  sales  made  for  others,  while  wholesalers  obtai- 
their  revenue  chiefly  from  sales  of  merchandise  which  they  have  previously  bought.     Tl. 
principal  revenue  account  of  middlemen  is  "  Commissions,"  and  that  of  wholesalers  is  "  Me: 
chandise"  or  "Trading  Account"  which  represents  it.    Buyingandsellingmerchandiseiscalled 
"  trading,"  and  the  amount  of  merchandise  sold  during  a  fiscal  or  business  period,  figured 
at  prime  cost,  is  called  the  "turnover.  " 

While  there  are  many  lines  of  wholesaling,  some  of  which  have  more  or  less  special 
characteristics,  certain  forms  of  accounting  records  are  used  which  are  common  to  all. 
The  dry  goods  business  has  been  .selected  for  this  work,  to  illustrate  wholesaling  practices 
and  accounting,  because  of  its  representative  character,  both  as  regards  commodities  ami 
records. 

Books  kept  in  Wholesale  Business.  —  The  books  kept  in  a  wholesale  dry  goods  business  tl 
not  differ  in  principle  fmrn  those  used  in  other  lines  of  business  ;  but  most  progressive  house- 
make  use  of  modern  labor-saving  forms  of  account  keeping,  including  special  column  book-, 
impression  sales  books,  loose-leaf  sales  sheets,  loose-leaf  ledgers,  etc.,  wherever  practicable 

Books  to  Keep.  —  The  books  which  you  will  keep  in  this  work  are  the  journal,  sak- 
book,  invoice  book,  cash  book,  purchase  journal,  sales  journal,  general  ledger,  sales  ledger, 
purchase  ledger,  and  bill  book. 

Journal.  —  On  the  debit  side,  the  journal  here  used  is  provided  with  the  followin- 
columns :  Notes  Receivable,  Accounts  Payable,  General.  All  notes  received  are  entered 
in  the  Notes  Receivable  column.  The  several  items  in  this  column  are  checked  but  not 
posted.  The  footing  of  the  column  is  posted  to  the  debit  of  Notes  Receivable  in  the  general 
ledger.     (See  Model  Journal,  page  217.) 

When  a  creditor  is  ])aid  by  note,  he  is  charged  in  the  column  entitled  "  Accounts  Payable.  ' 
The  several  items  in  this  column  are  posted  to  the  debit  of  the  proper  accounts  in  the  pur- 
chase ledger.     The  footing  of  this  column  is  posted  to  the  debit  of  the  controlling  accouir 
Accounts  Payable,  in  the  general  ledger. 

Debit  journal  amounts  other  than  those  provided  for  above  are  entered  in  the  General 
column.  The  .several  items  in  this  column  are  posted  to  the  debit  of  the  proper  accounts  in 
the  general  ledger.     The  footing  is  not  posted. 

21(! 


WHOLESALE    DRY   G(X)DS   I'.USINESS 


217 


Journal,  August  i,   ig- 


General 


L.  F. 


3200 


5320 
24800 


1600 


845 


345  I  20  I 


'25 

5° 

1725 

50; 

4390:  40 

1725 

5° 

79001  |4o| 

u 

25900 

15 

5° 

3000 

13000 

600 

250 

Edward  Deane  has  this  day  l)cLn 
admitted  into  partnership  with  Geo. 
W.  Barnes  and  C.  M.  Lyon  under 
conditions  shown  in  articles  of  co- 
partnership executed  on  same  date. 

The  investment  of  each  partner  and 
the  assets  and  liabilities  of  tlie  firm 
are  shown  in  the  followins;  entries, 
and  a  new  set  of  books  is  opened 
showins;  the  following  balances. 


Cash 


in  bank  5200 
"  safe  120 
per  schedule 
•'  bill  book 
'•  sales  ledger 
accrued 
valued  at 


Inventory 

Notes  Receivable 

Accts.  Kec. 

Interest 

Furniture 

Real  Estate  "      " 

Horses  &  Wagons      '•      •' 

Insurance  une.xpired 

Accts.  Pay.         per  purchase 
ledger 

Notes  Payable    per  bill  book 

Interest  accrued 

Discount  on  bills  rec. 

Geo.  W.  Barnes  capital 

C.  M.  Lyon 

Edward  Deane        " 


B.  Martin  &  Co. 
Notes  Pav. 


note   at 
acct. 


4   m.  on 


Notes  Rec.  in  full  to  date  by 

D.  H.  Cross  &  Co.  4  m.  note 

Notes  Rec.  dft.  at   10  da.  for 

Curtis.  Hines  &      invoice  7/4 
Co. 

29 
R.H.White&Co.  R.  B.  p  175 
Returned  Pur- 
chases 

31 
Notes  Receivable, 
Accts.  Payable. 
Notes  Payable. 
Accts.  Receivable, 


24500 

140 
6 

■5751 

18687 

5000 


125 


13600 

1190 

79001 


50 


S45 


345 


1 190 


40 


Notes  Pay. 


1600 


13600 


218 


MODERN    II  nsiRATIVE   BOOKKEEPING 


'7^>r7^'^> 


■■AUf.    AMI    LXTLASATIOS 


^ 


/ 


•v.'^^s^  ^-^i^^-sz-^J 


r 


%^^^^. 


—^i^/ri^l^4^^c-^yylr 


if^p^>^?-t^i^^z^ 


r^^.^^ 


^C 


rr/ 


^r-v 


f  .    — ii^.^ V'o 


^y  ^ 


■'-'/£ 


'P 


The  journal  is  provided  with  the  following  columns  on  the  credit  side :  General,  Accounts 
Receivable,  Notes  Payable.  Whenever  a  customer  gives  a  note  on  account,  he  is  creditcil 
with  the  amount  of  the  payment  in  the  column  entitled  "  Accounts  Receivable."  The  several 
items  in  this  column  are  posted  to  the  credit  of  the  proper  accounts  in  the  sales  ledger.  The 
footing  of  this  column  is  posted  to  the  credit  of  the  controlling  account.  Accounts  Receivable, 
in  the  general  ledger. 

When  a  note  is  issued  on  account,  the  credit  entry  is  made  in  the  Notes  Payable  column. 
The  footing  of  this  column  is  posted  to  the  credit  of  Notes  Payable  in  the  general  ledger. 
The  several  items  are  checked  but  not  ]iosted. 

All  credit  journal  amounts  other  than  those  provided  for  above  are  entered  in  the 
General  column.  The  several  items  in  this  column  are  posted  to  the  credit  of  the  proper 
accounts  in  the  general  ledger.     The  footing  is  not  posted. 

The  special  columns,  Accts.  Pay.  and  Notes  Rec.  on  the  debit  side  of  the  journal,  and 
Accts.  Rec.  and  Notes  Pay.  on  the  credit  side,  are  footed  at  the  end  of  the  month,  and  the 
amounts  are  transferred  to  the  General  columns,  and  the  proper  ledger  titles  are  written 
oppo.site  them  in  the  explanation  columw.     The  journal  is  then  ruled  up  (see  page  217). 

Cash  Book.  —  On  the  debit  side  the  cash  book  is  provided  with  the  following  columns: 
Accounts  Receivable,  Disc.  Allowed,  Amount  Received,  Sales,  General.     (See  above  form. ) 


WHOLESALE   DRY   GOODS   BUSINESS 


210 


NAMB    AND    EXPLANATION 


C6...^ 


^a 


.-■■^-t't^.'C.-^t-^/ , 


/^_^^. 


j:i.-C^^,     ^(J'y&i 


•j:;>s!-^!<^,  f'^0^<i>t:<d^. 


3  /\r 


fl'Z 


^^2 


/  ■i^2C 


ZJ- 


6J. 


f-' 


<f~J-^/^ 


V  '' 


When  a  customer  pays  on  account,  the  amount  of  the  invoice  is  entered  in  the  column 
entitled  "Accounts  Receivable."  If  discount  is  allowed,  the  amount  of  the  discount  is  entered 
in  the  column  entitled  "  Discount  Allowed."  The  amount  of  cash  received  is  entered  in  the 
column  entitled  "Amount  Received."  All  cash  sales  of  merchandise  are  entered  in  the 
column  entitled  "  Sales  "  and  checked  in  the  L.  F.  column.  Other  debit  amounts  are  entered 
in  the  column  entitled  "  General." 

The  several  items  in  the  column  entitled  "Accounts  Receivable"  are  posted  to  the  credit 
of  the  proper  accounts  in  the  sales  ledger.  The  footing  of  this  column  is  brought  down  and 
extended  into  the  General  column,  with  the  explanation  Accts.  Rec,  and  the  amount  is  posted 
to  the  credit  of  the  controlling  account.  Accounts  Receivable,  in  the  general  ledger.  The 
column  entitled  "  Discount  Allowed  "  is  footed  in  red  ink  and  the  footing  is  transferred  in  black 
ink  to  the  credit  side  of  the  cash  book  and  extended  into  the  General  column,  with  the  explana- 
tion "  Discount  on  Sales,  contra,  "  and  the  amount  is  posted  to  the  debit  of  Discount  on  Sales 
in  the  general  ledger.  Neither  the  items  nor  the  footing  of  the  column  entitled  "  Amount 
Received  "  is  posted.  The  several  items  in  the  General  column  are  posted  to  the  credit  of 
the  proper  accounts  in  the  general  ledger.  The  footing  of  the  column  entitled  "  Sales  "  is 
brought  down  and  extended  into  the  General  column,  with  the  explanation,  Sales,  and  the 
amount  is  posted  to  the  credit  of  Sales  in  the  general  ledger. 


220  MODERN   ILLUSTKAIIVE   bOOKKEIil'ING 

On  the  credit  side  the  cash  book  is  provided  with  the  following  columns:  Accounts 
Pavable,  Discount  Allowed,  Amount  Paid,  Collection  and  I-3.\change,  General. 

When  a  creditor  is  paid  on  account,  tiie  amount  of  the  invoice  is  entered  in  the  column 
entitled  "  Accounts  Payable."  If  discount  is  allowed,  the  amount  of  the  discount  is  entered  in 
the  column  entitled  "  Discount  Allowed."  The  amount  paid  in  cash  is  entered  in  the  column 
entitled  "  Amount  Paid."  Cash  payments  for  collection  and  exchange  are  entered  in  the 
column  entitled  "  Collection  &  E.xchange."  All  other  credit  cash  book  amounts  are  entered 
in  the  General  column. 

The  several  items  in  the  column  entitled  "Accounts  Payable"  are  posted  to  the  debit  of 
the  proper  accounts  in  the  jjurchase  ledger.  The  footing  of  this  column  is  brought  down  and 
extended  into  the  General  column  with  the  explanation,  Accts.  Pay.,  and  the  amount  is  posted 
to  the  debit  of  the  controlling;  account,  Accts.  Payable,  in  the  general  ledger.  The  column 
entitled  "  Discount  Allowed  "  is  footed  in  red  ink  and  the  footing  is  transferred  in  black  ink 
to  the  debit  side  of  the  cash  book,  and  extended  into  the  General  column,  with  the  e.xplana- 
tion  "  Discount  on  Purchases,  contra,"  and  the  amount  is  posted  to  the  credit  of  Discount 
on  Purchases  in  the  general  ledger.  Neither  the  items  nor  the  footing  of  the  column  entitled 
"  Amount  Paid  "  is  posted.  The  several  items  in  the  General  column  are  posted  to  the  debit 
of  the  proper  accounts  in  the  general  ledger.  The  footing  of  the  column  entitled  "Col. 
&  l-^xch."  is  brought  down  and  extended  into  the  general  column,  with  the  explanation 
"Collection  and  Exchange,"  and  the  amount  is  j^osted  to  the  debit  of  Collection  and  Exchange 
in  the  general  ledger.     The  cash  book  is  ruled  up  as  shown  in  the  form  on  pages  218  and  219. 

The  two  special  columns,  .Accounts  Receivable  or  Accounts  Payable  and  Discount  Allowed,  on  each  side  of 
the  cash  book,  could  be  omitted,  and  the  discount  items  entered  in  special  columns  in  the  journal.  Some  book- 
keepers and  accountants  contend  tliat  only  actual  cash  amounts  should  appear  in  the  cash  book,  and  that  no 
contra,  or  opposite,  entries  should  be  made  in  that  book.  The  advantages  claimed  for  this  method  are.  that 
every  amount  is  supported  by  a  voucher,  and  that  the  work  of  .auditing  the  cash  book  is  reduced  to  a  minimum. 
This  method,  however,  necessitates  the  making  of  numerous  additional  entries,  and  therefore  materially  increases 
the  work  of  the  Ijoukkeepcr. 

The  cash  book  used  in  tliis  work  saves  the  labor  ot"  writing  the  name  of  tlie  account  a  second  time,  as  would 
be  necessary  for  discount  and  similar  contra  items  when  the  journal  is  used  for  this  purpose,  and  permits  of 
posting  the  entry  in  one  amount  to  the  account  atTected.  and  the  total  of  the  invoices  paid,  in  one  amount,  to  the 
controlling  account.  .At  the  same  time,  the  actual  cash  received  or  paid  is  easily  determined,  and  the  work  of 
auditing  the  cash  book  is  not  materially  increased:  furthermore,  if  it  is  desired  to  have  the  account  show  the 
cash  received  or  paid,  and  the  di.scount  allowed,  these  items  can  be  posted  directly  from  the  cash  book,  with  a 
saving  of  time  over  tlie  oilier  method. 

Proving  Cash.  — The  cash  may  be  proved  at  any  time  by  comparing  the  total  amount  in 
safe  and  in  bank  with  the  difference  between  the  total  of  the  Amount  Received,  Sales,  and 
General  columns,  on  the  debit  side  of  the  cash  book,  and  the  total  of  the  Amount  Paid,  Coll. 
&  ICxch.,  and  General  columns  on  the  credit  side.  If  the  cash  is  proved  at  the  end  of  the 
month,  the  amoiuit  will  balance  the  cash  book  after  the  footings  of  the  special  columns  have 
been  transferred  to  the  General  columns.     See  form  of  cash  book. 

Cash  Differences.  —  If  the  cash  should  be  "over"  or  "short"  at  the  time  of  proving, 
the  work  done  since  the  cash  last  proved  should  be  carefully  reviewed,  the  entries  should 
be  checked  and  compared  with  the  vouchers,  and  the  additions  verified.  If  the  difference 
cannot  be  located,  the  amoimt  should  be  carried  along  until  the  end  of  the  month,  either  in 
the  cash  book  or  on  a  slip  in  the  cash  drawer.  The  difference  is  carried  in  the  cash  book 
by  making  a  meinorandum  on  the  credit  side,  and  in  the  explanation  column  over  $ —  or 
shorf  S— :  and  if  in  the  cash  drawer,  on  a  slip,  headed  Cash  Differences,  with  a  record  of 


WHOLESALE    DRY   GOODS    BUSINESS  221 

the  date,  amount,  and  explanation,  slioi't  or  over,  of  each  item.  The  net  amount  of  the  slip 
is  taken  into  account  in  proving  the  cash  for  the  next  proving  date. 

If  any  difference  in  cash  exists  at  the  end  of  the  month,  a  cash- book  entry  should  be 
made,  debiting  or  crediting  Cash  Differences  account  for  the  amount.  The  slij),  when  one 
is  used,  should  be  filed  as  a  voucher. 

When  a  cash  difference  is  located  that  has  beeti  previously  entered  in  the  Cash  Differ- 
ences account,  a  cash  book  entrv  should  be  m.ide  to  adjust  it.  If  the  item  belongs  to  tlie 
current  month,  it  must  be  treated  according  to  the  facts;  if  the  difference  was  due  to  an 
error  in  recording  the  amount,  or  in  addition,  proper  correction  of  the  figures  should  be 
made.  If  it  was  due  to  a  mistake  in  paving  out  or  receiving  currency,  and  the  eiror  is 
adjusted  by  the  receipt  or  payment  of  the  amount,  no  entry  is  necessary,  excejit  on  the  dif- 
ference slip,  when  one  is  kept.  If  the  amount  is  not  received  or  paid,  and  the  matter  has 
been  satisfactorily  settled,  the  proper  entry  should  be  made  in  the  cash  book. 

At  the  end  of  a  business  period,  the  balance,  if  any,  of  the  Cash  Differences  account  is 
usually  treated  as  a  profit  or  a  loss. 

Invoice  Book  and  Sales  Book.  —  These  books  will  not  differ  either  in  form  or  use  from 
those  previously  kept,  but  in  the  sales  book  cash  sales  are  placed  in  a  special  cash  column. 

The  invoice  book  will  be  used  as  a  principal  book  in  August,  as  heretofore,  and  as  an 
auxiliary  book  in  September.  In  August  the  invoice  book  will  be  footed,  and  the  explana- 
tion, "Purchases"  (Dr.),  "  Accts.  Payable"  (Cr. )  written  on  two  lines  opposite  the  footing; 
purchases  on  the  first  line  and  Accts.  Payable  on  the  second,  and  a  little  to  the  right,  to 
show  that  it  is  a  credit  item. 

The  sales  book  will  also  be  used  as  a  principal  book  in  August,  but  will  be  dispensed 
with  in  September.  The  columns  in  the  sales  book  are  Items,  Cash,  and  On  Account.  The 
several  items  in  the  On  Account  column  are  posted  to  the  debit  of  their  respective  accounts 
in  the  sales  ledger.  The  several  items  in  the  Cash  column  are  checked  and  not  posted. 
The  Cash  and  On  Account  columns  are  footed,  and  the  footing  of  the  On  Account  column 
is  brought  down  and  "Accounts  Receivable"  (Dr.),  "Sales"  (Cr.)  are  written  opposite  it  in 
the  explanation  column;  and  the  amount  is  posted  to  the  debit  of  the  Accounts  Receivable 
account  and  to  the  credit  of  Sales  account,  in  the  general  ledger.  The  footing  of  the  Cash 
column  is  not  posted  from  the  Sales  book  but  is  compared  with  the  footing  of  the  Sales 
column  in  the  cash  book,  and  checked. 

Purchase  Journal. — This  book  contains  a  record  of  the  invoices  of  goods  bought.  It 
is  the  ordinarv  form  of  two-column  journal,  one  column  for  daily  items  and  the  other  for 
dailv  and  other  totals.  When  an  invoice  reaches  the  bookkeeper,  it  is  entered  in  the  pur- 
chase journal.  Only  the  date,  serial  number  or  department  letter,  name  of  the  creditor,  and 
amount  of  the  invoice  appear  in  this  book.  The  serial  number  or  department  letter  is  next 
written  on  the  invoice,  and  it  is  then  posted  to  the  proper  account  in  the  purchase  ledger. 
It  is  then  pasted  in  the  invoice  book.  The  several  items  in  the  purcha.se  journal  are  not 
posted,  but  the  footing  is  posted  at  the  end  of  the  month  to  the  debit  of  Purchases  account, 
and  to  the  credit  of  Accounts  Payable  account,  in  the  general  ledger.  The  purchase  journal 
will  be  used  in  the  September  work. 

Sales  Journal. — This  book  contains  a  record  of  the  sales.  Only  the  date,  name,  and 
amount  of  the  sale  appear  in  this  book.  The  complete  record  of  the  sale  appears  on  the 
duplicate  bills,  from  which  the  posting  is  done  and  the  entries  in  the  sales  journal  are  made. 

The  form  of  the  sales  journal  is  the  same  as  that  of  the  sales  book  used  in  August,  excepting 


M(i])KK.\    Il.LLSlKAllVL    JJi.K  )KKhtJ'l.\t; 


that  it  cc  ntains  no  cash  column,  and  it  is  footed  at  the  end  of  the  month,  posted  and  closed 

the  same  as  that  book,  the  entry  being  "Accounts  Receivable  "  (Dr.),  "Sales  "  (Cr.)for  the 

amount.     The  sales  jmirnal  will  be  used  in  the  September  work. 

Bill  and  Charge  System.  —  instead  of   making  bills  singly  with  the   pen  or  typewriter. 

they  can  be  made  in  duplicate,  triplicate,  etc.,  on  a  billing  machine  or  a  typewriter,  by  tho 

use  of  carbon  sheets,  and  one  of  tiic 
copies  used  as  the  original  entry,  or  post- 
ing medium,  thereby  dispensing  with  the 
necessity  of  the  sales  book.  This  is  called 
"  the  bill  and  charge  system."  The  orig- 
inal bill  is  sent  to  the  customer,  the  dupli- 
cate to  the  bookkeeper,  and  the  triplicate 
is  placed  in  a  binder  in  the  shipping  de- 
])artment,  for  reference.  From  the  dupli- 
cate, the  entry  is  made  in  the  sales  journal, 
as  e.xplained  above,  and  after  the  serial 
number  has  been  written  on  the  bill,  the 
account  in  the  sales  ledger  is  charged 
from  it,  after  which  the  bill  is  filed  in  a 
numeric  binder.  The  duplicate  bills  sup- 
port the  records  in  the  sales  journal,  the 
same  as  the  invoices  pasted  in  the  invoice 
book  support  the  records  in  the  purchase 
journal. 

Bill  Book.— The  bill  book  will  be  kept 
as  an  au.xiliary  book ;  that  is,  a  record  (>f 
all  notes  received  and  issued  will  be  macl> 
in  it,  but  no  posting  will  be  done  there- 
from. Some  bookkeepers  post  the  items 
directly  from  the  bill  hook  to  their  respective  accounts,  and  the  monthly  footings  to  the  Notes 
Receivable  and  X(jtes  Payable  accounts  in  the  general  ledger. 

Ledgers. — Three  ledgers  are  used  in  this  work,  viz.,  purchase  ledger,  sales  ledger,  and 
general  ledger.  The  purchase  ledger  contains  the  accounts  of  all  persons  from  whoiv 
goods  are  purchased  on  account.  The  sales  ledger  contains  the  accounts  of  all  persons  t 
whom  goods  are  sold  on  account.  Both  these  ledgers  are  provided  with  special  columns. 
The  purchase  ledger  and  sales  ledger  are  subsidiary  to  the  general  ledger,  and  are  con- 
nected with  it  by  their  controlling  accounts.  Accounts  Payable,  and  Accounts  Receivable. 
The  difference  between  the  sides  of  the  Accounts  Payable  account  in  the  general  ledger 
should  always  agree  with  the  difference  between  the  sides  of  the  purchase  ledger.  Th^ 
difference  between  the  sides  of  the  Accounts  Receivable  account  in  the  general  ledgci 
should  always  agree  with  the  difference  between  the  sides  of  the  sales  ledger. 

The  general  ledger  contains  all  the  accounts  of  the  business  which  are  not  ke|)t  in  the 
purchase  ledger  or  the  sales  ledger,  together  with  the  controlling  accounts  of  those  ledgers. 

The  Balance  Ledger.  —  In  this  month's  work  you  will  use  what  is  known  as  the  "balance 
ledger"  for  the  form  of  your  purchase  ledger  and  sales  ledger.  See  form  of  Balance  Ledger, 
page  223. 


,  _  ,^ 

^^                                 — 

^^M^^^^^^^MM:^:) 

**=*^    -'"^OT-^^V-r-ryz^^-^  -^3R 

m  ^.rxr~-  'i  '■"■■:  ■-:  ;:^r  gTS-^rae  0 

iXl^ffi^/i^r-J^/jf   occcstcr  31.  1909.  1 

Sold   to                   >u-  U<  H.  Kolcci. 

f(.   1. 

0 

c 

_^_-  _^ -m-tL'-n-^-::-* 

s. 

HI. 

*"  " 

D«c 

0 

1   Pr.   L..-...*.   ovo 

5    Mkl». 

)1  Ydi.  Klbtea 

10 

I   Packet   Sook 

;o 

1  Pr.  CurtAlci 

y,ii 

11 

2  rii** 

12  Ka-mtt 

t 

«705 

" 

1     SOBl- 

1  T.  Peeler 

6  Orar^a   Stick* 

2  To«ttk  finjthc* 

p 

2£04 

16 

3  Books 
I  Book 

p 

1701 

1   PC.  BltboB 

t)C 

\t 

p 

3«01 

1  T«anl«  tecquet 
1  CoT«r 

3  ;o 
50         4     - 

p 

VtOOJ 

17 

3i  Ydo.  Vftlitlnc 

12* 

" 

0 

:}  idi.  *»i*iiae 

^^ 

et        .    - 

y 

v^ 

19 

4   Towels 

n 

so 

b  Towel ■ 

1  Oi 

p 

4  Ydi.  Outing  Flannel 

10 

1  ya.  Cu'.lnc  7lKnael 

20 

0 

p 

^^^^^vCouch  Cover 

9u 
8  ;u 

p 

00 

1  c: 

^^^^^       .              *  BMicer 

10 

1  :■• 

^^^^^^^^    . 

M 

y- 

t 

1508     2^^^^^^  . 

.  ''^ 

P 

2201          ^^^^^^X 

6  43          .  ,- 

P 

17D1     £3    ^^^^^^^^N. 

60 

58 
00 

2302             ^^^^^^^K^ 

i^l      ' 

^^^^^^mM*  " 

at 

Ret'd            .    .    .  "    ' 

\( 

[ 

WHOLESALE   DRY    GOODS    BUSINESS 


223 


Warner,  DeForest  &  Co., 


Amsterdam,  N.Y. 


Pat  e 

Descrip- 
tion 

Terms 

FOL 

Debit 

Balan 

CE 

Credit 

Date 

FOL, 

ExPLAr.ATION 

i9 

— 

812 

70 

19 

— 

July 

I 

BaL 

J 

I 

812 

70 

1 

'   812 

70 

July 

10 

12 

c 

9 

S.  B. 

5  7j  10  ds. 

7 

215 

70 

2 

^2.5- 

70 

19 

14 

c 

14 

i. 

2/20  Net  30 

9 

168 

70 

4 

3   210 

25 

21 

•4 

c 

18 

1 1 

415 

60 

5 

•1    168 

70 

23 

16 

c 

20 

a 

Net  60  ds. 

12 

388 

70 

5    415 

60 

28 

18 

Note  4  mos.  Int. 

20 

*' 

2/10 

12 

412 

20 

0 

«4I2 

20 

3° 

18 

C 

21 

a 

Cash 

'3 

210 

2? 

3 

26 

Net  30  ds. 

14 

160 

40 

549 

10 

The  headings  of  the  columns  of  the  balance  ledger  explain  their  uses.  The  Debit  and 
Credit  columns  are  placed  near  together,  with  the  Balance  column  between.  This  form  of 
subsidiary  ledger  is  specially  adapted  for  use  in  any  business  where  the  terms  are  specific 
and  induce  or  require  prompt  settlement  of  every  sale  or  purchase.  When  any  particular 
bill  has  been  paid,  instead  of  ruling  off  the  items,  a  small  figure  is  written  opposite  each  of  the 
amoimts.  (See  model  form,  above.)  A  glance  at  the  account  shows  what  bills  remain  unpaid, 
and  in  taking  a  balance  of  the  account  only  these  amounts  are  considered.  The  balance  of 
an  account  is  written  in  the  Balance  column  at  the  end  of  the  month,  and  should  agree  with 
the  monthly  statement  sent  to  the  debtor  or  received  from  the  creditor.  Only  the  balance 
at  the  end  of  the  current  month  should  be  included  in  the  schedule  of  balances  or  proof  of 
the  balance  ledger. 

Sectional  Sales  Ledgers. —  When  it  is  not  convenient  or  desirable  to  keep  all  of  the  ac- 
counts with  customers  in  one  sales  ledger,  these  accounts  may  be  divided,  and  each  division 
kept  in  a  sejiarate  or  sectional  sales  ledger.  The  accounts  may  be  divided  alphabetically, 
geographically,  or  in  any  other  way  that  may  be  desired,  and  the  separate  ledgers  will  be 
known  bv  the  accounts  which  they  contain,  as  Sales  Ledger  A — D,  Ohio  Sales  Ledger, 
City  Sales  Ledger,  Dept.  G.  Sales  Ledger,  etc.  Each  sales  ledger  will  have  its  own  sales 
book  or  books,  and  may  have  a  separate  controlling  account,  or  all  of  them  may  be  con- 
trolled by  the  main  controlling  account.  Accounts  Receivable  account. 

Self-Balancing  Ledgers. — -A  subsidiary  ledger  from  which  a  trial  balance  can  be  taken 
without  reference  to  its  controlling  account  in  the  general  ledger  is  called  a  Si-if-balanciiig 
hdgcr.  A  subsidiary  ledger  may  be  made  self-balancing  by  constructing  in  it  a  controlling 
accoimt,  and  posting  to  that  account  the  amounts  which  are  posted  to  the  controlling  account 
in  the  general  ledger,  from  the  original  books  of  entry,  such  as  the  footings  of  the  sales 
book  or  purchase  book,  and  of  the  accounts  receivable  or  accounts  payable  columns  in  the 
cash  book.  Since  the  items  represented  by  the  footings  have  been  posted  to  the  proper 
sides  of  the  separate  accounts  in  the  subsidiary  ledgers,  these  footings  must  be  posted  to  the 
opposite  sides  of  the  controlling  accounts  in  the  subsidiary  ledgers. 

The  advantage  of  the  self-balancing  ledger  is  that  the  assistant  bookkeepers  can  prove 
their  ledgers  at  the  end  of  the  month,  or  at  other  times,  without  having  to  refer  to  the  general 
ledger,  or  to  obtain  from  the  head  bookkeeper  the  balances  of  their  controlling  accounts. 


2-2i  MODERN    ILLLslRATlVK    I'.CXJKKEEPING 

The  title  of  the  controlling  account  in  a  subsidiary  ledger  may  be  the  same  as  that  in  the 
general  ledger,  as  Accounts  Receivable,  or  Sales,  for  the  sales  or  customers'  ledger;  or  it 
may  have  the  title  Controlling  Account,  or  the  title  General  Ledger. 

In  the  work  for  September  the  student  will  convert  his  purchase  ledger  and  his  sales 
ledger  into  self-balancing  ledgers,  by  constructing  a  controlling  account  in  each  of  these 
ledgers,  under  the  title  Controlling  Account,  and  after  posting  the  footings  of  the  original 
books  of  entry  to  the  proper  controlling  accounts  in  the  general  ledger,  as  heretofore,  he  will 
re-post  these  footings  to  the  ojiposite  sides  of  the  controlling  accounts  in  the  subsidiary 
ledgers,  checking  the  amounts  posted  in  the  usual  way.  The  two  check  marks  against  each 
footing  will  show  that  the  amount  has  been  posted  to  both  controlling  accounts. 

Private  Ledger.  —  When  it  is  desired  not  to  have  the  general  ledger  show  the  capital 
accounts  of  the  proprietors,  and  other  accounts  which  may  be  considered  of  a  private  nature, 
these  accounts  are  kept  in  a  subsidiary  ledger,  called  a  "private  ledger,"  and  a  controlling 
account,  Private  Ledger,  is  opened  in  the  general  ledger.  The  private  ledger  and  the 
private  books,  which  are  used  in  connection  with  it,  are  usually  kept  bv  a  member  of  the 
firm,  or  by  the  confidential  man  of  the  concern. 

Accounts  Kept.  —  The  accounts  kept  in  any  business  will  depend  chiefly  upon  its  char- 
acter and  size,  and  the  detailed  informaticm  which  the  proprietor  desires  to  have  the  books 
show. 

Some  accounts  are  applicable  to  nearly  all  lines  of  business  and  will  usually  be  found  in 
nearly  every  set  of  books.  In  a  mercantile  business.  Merchandise  account  is  the  principal 
trading  or  revenue  account,  and  in  a  wholesale  business  this  account  may  be  represented 
by  subdivisions,  as  Inventory,  Purchases,  Sales,  Disccunt  on  Purchases,  Discount  on  Sales, 
Returned  Sales,  Returned  Purchases,  Allowances  by  Others,  Allowances  to  Others,  Freight 
Inward.  The  principal  deduction  from  revenue  in  a  mercantile  business  is  expense,  and 
in  a  wholesale  business  the  expense  account  may  be  represented  by  subdivisions,  as  Salaries, 
Rent,  Insurance,  Horses  and  Wagons,  Taxes,  etc.,  and  these  may  be  classified  as  Selling 
e.xpenses.  General  and  .Administrative  expenses. 

It  is  desirable  to  have  the  number  of  accounts  in  the  general  ledger  as  few  as  possible,  consistent  with  good 
accounting,  and  at  the  same  lime  have  proper  regard  for  the  classification  and  details  of  the  business.  This 
can  be  accomplished  by  tlie  use  of  special  books  of  original  entry,  and  subsidiary  or  underlying  ledgers. 

Analyzing  Accounts.  —  When  more  detailed  information  is  desired  regarding  anv  phase 
of  a  business  tlian  is  shown  by  the  footings  or  balance  of  the  account  which  it  represents, 
this  may  be  obtained  by  "analyzing  the  account."  This  is  done  by  drawing  off  the  items 
in  the  account  on  an  "analysis  sheet,"  where  they  are  classified  and  entered  in  separate 
columns,  headed  according  to  the  information  which  it  is  desired  to  obtain. 

Division  of  Accounts. — Accounts  are  usually  divided  into  three  general  classes;  namely, 
Real  accounts.  Personal  accounts,  and  Nominal  accounts. 

Real  accounts  are  accounts  which  represent  property  or  values,  such  as  Cash,  Merchan- 
dise, Inventory,  Real  Estate,  etc.  Personal  accounts  are  accounts  with  debtors  and  creditors 
of  the  business,  and  include  the  capital  account,  which,  although  not  a  liabilitj',  represents 
the  amount  for  which  the  business  is  accountable  to  the  proprietor.  Notes  Payable,  Notes 
Receivable,  Mortgages  Payable,  Mortgages  Receivable  accounts  are  also  classed  as  Personal 
Accounts.  Real  accounts  and  Personal  accounts  are  called  "  continuing  accounts,"  because 
they  are  not  opened  or  set  up  for  any  definite  period. 

Nominal  accounts  are  accounts  which  are  opened  or  raised  for  teniporarv  purposes,  and 


WHOLESALE    DKY    GOODS    BUSINESS  225 

are  closed  at  the  end  of  a  business  period,  such  as  Rent,  Salaries,  Insurance,  Taxes,  Pur- 
chases, Sales,  Profit  and  Loss,  etc. 

Most  nominal  accounts  show  profits  or  losses,  but  the  subdivisions  of  the  merchandise 
account  show  "activities,"  namely,  the  trading  of  the  business,  and  the  main  account  shows 
the  profit  or  loss. 

Nominal  accounts  possess  the  elements  of  real  accounts  when  tlicy  represent  assets  or  liabilities,  such  as 
interest  accrued  and  not  paid,  unearned  insurance,  and  property  on  hand  at  the  beginning  of  a  fiscal  period 
which  was  previouslv  charged  to  nominal  accounts,  such  as  office  supplies,  shipping  supplies,  etc. 

Accounts  to  Construct.  —  In  addition  to  most  of  the  accounts  with  which  you  are  already 
familiar,  you  will  construct  other  real  and  nominal  accounts  in  this  business.  These  will 
be  indicated  and  explained  as  they  arise  in  the  work.  i 

The  general  ledger  will  be  both  opened  and  closed  by  passing  the  entries  through  the 
journal. 

Assets  and  Liabilities. — The  assets  of  a  business  consist  of  all  property  and  rights 
belonging  to  the  business  which  have  a  money  value.  The  liabilities  of  a  business  are  the 
amounts  due  to  outside  parties,  as  distinguished  from  its  obligations  to  the  proprietors  or  the 
stockholders.  The  assets  and  liabilities  of  a  business  may  be  divided  into  fi.xed  assets  and 
floating  assets,  fixed  liabilities  and  floating  liabilities. 

Fixed  assets  are  the  permanent  assets  which  are  necessary  for  conducting  the  business, 
such  as  the  furniture  and  fi.xtures  of  a  store,  plant  and  machinery  of  a  factory,  office  equip- 
ment, etc.  Floating  or  current  assets  are  the  assets  which  are  constantly  changing  in  quan- 
tity and  value  as  the  result  of  the  operations  of  the  business,  such  as  cash,  merchandise, 
notes  receivable,  accounts  receivable,  supplies,  etc.  These  assets  may  be  sold  or  realized 
without  interfering  with  a  business  or  its  operations.  Floating  assets  are  aLso  called  circu- 
lating assets.  Floating  as.sets  which  con.sist  of  cash,  or  can  be  readily  converted  into  cash, 
such  as  checks,  demand  notes,  securities  which  have  a  ready  market,  are  called  quick 
assets  ;  also  called  liquid  assets. 

Fixed  liabilities  include  obligations  which  are  not  payable  for  a  long  time,  such  as 
mortgages,  mortgage  bonds,  etc.,  and  are  liens  on  some  of  the  fixed  assets.  Floating  or  cur- 
rent liabilities  are  the  claims  of  creditors  which  will  have  to  be  met  with  in  a  short  time,  as 
notes  payable,  accounts  payable,  interest  accrued  but  not  due,  etc.  Liabilities  which  are 
not  absolute,  but  which  may  come  into  existence  as  the  result  of  the  happening  of  some 
events,  are  called  contingent  liabilities. 

PRELIMINARY    WORK 

August  i,  19— 

You  have  entered  into  partnership  this  day  with  Henry  W.  Taylor  and  Clark  F.  Wood, 
who  have  been  conducting  a  wholesale  dry  goods  business  under  the  style  of  Taylor  & 
Wood.  The  name  of  the  new  firm  will  be  Taylor,  Wood  &  Co.,  and  its  purpose  will  be  to 
purchase  and  develop  the  business  of  the  firm  of  Taylor  &  Wood. 

In  accordance  with  the  Articles  of  Copartnership,  which  were  drawn  up  in  triplicate  by 
an  attorney,  and  executed  this  day  by  the  partners,  the  partnership  is  to  continue  five  years, 
unless  sooner  dissolved  by  mutual  consent  of  the  partners. 

You  are  to  invest  $2500  cash  in  the  business,  and  Mr.  Taylor  and  Mr.  Wood  are  to 
invest  their  respective  interests  in  the  business  of  Taylor  &  Wood,  as  they  appear  on  the 
books  of  that  firm  when  closed  as  of  July  31,  19 — • 


226  MODERN'   ILLUSTRATIVE   BOOKKEEPING 

The  new  firm  is  to  take  over  the  assets,  and  to  assume  the  liabilities  of  the  old  firm  at 

their  book  values. 

By  ''  book  values  '"  is  meant  the  balances  of  the  accounts  as  shown  by  tlie  ledger,  no  allowances  being  made 
for  possible  failure  of  debtors  to  pay  in  full,  nor  for  depreciation  of  property. 

The  partners  are  to  be  allowed  salaries,  monthly,  for  their  services,  as  follows  :  Taylor, 
S  1 50  ;  Wood,  S  1 25  ;  yourself,  S  1 75. 

The  books  are  to  be  closed  annually,  as  of  July  31,  during  the  life  of  the  partnership, 
and  at  the  termination  of  the  same. 

At  the  time  of  closing  the  books,  each  partner  shall  be  charged  with  interest  at  6  V  on 
such  sums  as  he  may  have  withdrawn  from  the  business  for  his  personal  use,  from  the  date 
of  such  withdrawals  to  the  date  of  closing,  and  he  shall  receive  interest  at  6  '/  on  his  invest- 
ments.    No  member  of  the  firm  shall  draw  to  exceed  S250  per  month  for  his  personal  use. 

The  profits  and  losses  of  the  business  are  to  be  shared  equally  by  the  partners. 

No.  1.  —  This  cash  represents  your  investment,  which  you  will  turn  over  to  the  business 
by  placing  it  in  the  Cash  Drawer.  The  proper  record  will  be  made  when  the  books  are 
opened.     Place  the  notes  receivable  on  hand  in  the  Cash  Drawer  also. 

The  assets  and  liabilities  of  the  firm  of  Taylor  &  Wood,  at  the  close  of  business  July  31 
19 — ,  and  the  interests  of  the  partners  are  shown  by  their  Balance  Sheet  and  supporting 
schedules,  which  are  given  below. 

H.\i..\NCE  Sheet 
T.wi.OK  &  W'oon,  July  31,   19 — 
Assi/s 

Cash  in  Commercial  Bank  $  5<S6o. 

Notes  Receivable            per  schedule  No.  3,  2102.45 

Interest,  accrued  on  above  17-24 

Account  Receivable       per  schedule  No.  i,  20442.75 

Inventory,  merchandise  "           "         No.  5,  26609.96 

Shipping  Supjiiies            "           "          No.  9,  292.07 

Office              "                   "          "          Nc.  8,  169.31 

Insurance,  unearned  premiums,  275. 

Horses  and  Wagons     ])er  schedule  No.  7,  750. 

Furniture  and  Fixtures  "          "         No.  6,  2500. 

Real  Instate,  flat  -74  Chestnut  St.,  12000. 

Total  assets,  37101S. 78 

Lidltilifics 

Notes  Payable       per  .schedule  No.  4,  $10500. 

Interest,  accrued  on  above,  128.25 

Accounts  Payable       per  schedule  No.  2,  19264.69 

Total  liabilities,  .         S  29892.94 

Net  assets,  541125.84 

Ca/>!tal 
H.  W.  Taylor  capital  %  $16431.95 

C.  F.  Wood  "        "  S  24693.89 


Present  worth,  S41 125.84 


WHOLESALE   DRY  GOODS  BUSINESS  227 

Schedule   i.     Accounts  Receivable,  per  Sales  Ledger 

Harris  &  Smith,  139  Main  St.,  City,  $4577.94 

Brown  &  Wilson,  Troy,  1324. 11 

Jas.  H.  Wood  &  Son,  Newton,  1016.42 

L.  H.  Parker,  Lima,  1203.86 

Sibley  &  Co.,  Gardner,                                           •  2943.01 

W.  B.  Snow,  Akron,  S36.8S 

Ingham  &  Case,  Alton,  66.35 

B.  C.  Wiley,  Waverly,  122.44 

J.  G.  Smith,  Ottawa,  91 4- '3 

W.  O.  Harrison,  Randolph,  1682.12 

Lewis  W.  Chase,  Jackson,  3695.42 

Charlton,  Sons  &  Co.,  Dansville,  2360.07 

S 20442.7s 

Schedule  2.     Accounts  Payable,  per  Purchase  Ledger 

Sibley,  Lindsay  &  Curr  Co.,  New  York,  $10184.23 

Burke,  FitzSimons,  Hone  &  Co.,  Boston,  2837.90 

Gimbel  Bros.,  Philadelphia,  4628.71 

Granite  ]\Iills,  Fall  River,  Mass.,  904.85 

Little  Falls  Woolen  Co.,  Little  Fails,  N.Y.,  709.00 

S  19264.69 
Schedule  3.     Notes  Receivable 

Note  of  C.  F.  Jenkins  for  $407.32,  dated  May  18,  payable  at  First  National  Bank, 
Marietta,  Ohio,  drawn  at  3  months  with  interest,  at  6  V  . 

Note  of  Wilson  &  Randolph  for  S654.90,  dated  June  14,  payable  at  Merchants  Bank, 
Buffalo,  N.Y.,  drawn  at  two  months  with  interest,  at  6'/,  . 

Note  of  Warren  &  Co.  for  S 325.00,  dated  July  23,  payable  at  Traders  Bank,  Scranton, 
Pa.,  drawn  at  sixty  days  without  interest. 

Note  of  Isaac  Holman  &  Sons  for  $715.23,  dated  June  i,  payable  at  Second  National 
Bank,  Newark,  N.J.,  drawn  at  three  months  with  interest,  at  6 '/, . 

Interest  accrued  on  the  above,  $17.24. 

Schedule  4.     Notes  Pav.xbi.e 

Note  in  favor  of  Commercial  Bank  for  $10000,  dated  May  20,  drawn  at  four  months 
with  interest,  at  6  ',, . 

Note  in  favor  of  Little  Falls  Woolen  Co.  for  $500,  dated  April  24,  drawn  at  four  months 
with  interest,  at  6  V  . 

Interest  accrued  on  the  above,  $  128.25. 

When  a  legal  change  is  made  in  the  ownership  of  a  business  it  marks  the  end  of  a  current  period,  and  the 
books  must  be  closed  for  that  period.  When  such  a  change  does  not  permanently  interrupt  the  progress  of  the 
business,  it  is  customary  to  continue  the  use  of  the  old  books.  Sometimes,  liouever,  advantage  is  taken  of  such 
a  situation  to  effect  a  partial  or  complete  change  in  the  system  of  records  and  accounts.  In  this  work,  it  will  be 
assumed  that  a  new  set  of  books  is  opened,  and  an  improved  system  of  accounts  installed. 

Opening  the  Books.  —  \'ou  will  now  frame  an  opening  entry  in  the  journal  to  represent 
the  assets  and  liabilities  of  the  business,  and  the  investments  of  the  partners.  The  assets 
which  Mr.  Tavlor  and  Mr.  Wood  have  contributed,  and  their  net  capital,  together  with  the 


228 


MnriERX    ILLUSTRATIVK    1' i,  iRKKEPING 


Price  Lists  fok 


1 

2 

3 

4 

5 

6 

1 

1 

-8 

9 

10 

I.  Amoskeng  Denim       .     .     . 

yd. 

.I2'' 

•25 

•'3 

'  ■24-- 

23= 

•24 

.14 

■23- 

.I4» 

■23 

2.    Ulk.  \'enctian 

•• 

1.25 

'•37 

1.24 

1.36      I 

23 

'■35 

1.22 

'•34 

1. 21 

'■33 

3.   Blue  Flannel 

•• 

■37 

.24-' 

.36^ 

■25 

26 

•25-^ 

•35- 

.26 

■35 

.26- 

4.    Brondcloth 

'• 

4.13 

4.01 

4.14 

4.02      4 

'5 

4-03 

4.16 

4.04 

4.17 

4.05 

5.   Creton  I'laid 

.12- 

•'^5 

.I2» 

.I2| 

I2> 

•'3| 

•'2;- 

■'3J 

■'3J 

.13^ 

6.  C.  Lining 

•07- 

.07-^ 

■07' 

•07;    1 

o7i 

■07l 

•07  i 

.08J 

■oSi 

.08' 

7.   Cashmere 

•• 

.60 

.58 

.62 

.56 

64 

•54 

.66 

■52 

.68 

•50 

8.  Coates  Thread 

d07. 

•55 

•54 

.36 

•53 

37 

•52 

•35 

■5' 

.38 

•50 

9.   Duchess  Satin 

vd. 

2.00 

'•95 

1.90 

1. 98       I 

96 

'■94 

'•92 

1.88 

1.86 

1. 84 

10.   Kniit  of  Loom  Sheeting 

.08- 

.08' 

.09-' 

.08' 

09> 

.09» 

.IO> 

.07' 

.10- 

•07' 

1 1 .   French  Crepon      .... 

'■75 

1.77 

'•73 

1.79      ' 

71 

1.81 

..69 

'■83 

,.67 

1.85 

12.  Kersey,  54  in 

1. 15 

1.16 

'■34 

1.17       I 

33 

1. 18 

'•35 

1.19 

1.32 

1.20 

13.  Monument  L'nlilchil.  Cotton 

.o6'i 

.o6j 

.06' 

.06J 

06' 

■065 

.065 

■05  i 

-o=;J 

•OS' 

14.  O.xford  Gray  Homespun 

1.00 

1.05 

r.io 

1.02       I 

04 

1.06 

1.08 

1. 12 

1. 14 

1. 16 

15.  I'lain  French  Poi)lin  .     .     . 

1.20 

1.18 

1 .22 

1.16       I 

24 

1. 14 

1.26 

1. 12 

1.24 

1. 10 

16.   Pique  Muslin 

•• 

■'5- 

..53 

.14- 

•'5' 

'4" 

.14' 

Af 

.161 

•'3-^ 

.16" 

17.   Smoked  Pearl  Buttons    .     . 

gro. 

•75 

■n 

■73 

•79 

71 

.81 

.69 

.83 

■71 

•85 

18.   Surah  Silk 

yd. 

.48 

.50 

.46 

•52    1 

44 

■54 

■42 

.56 

■40 

.58 

19.  Sateen 

.10- 

.10' 

.10^ 

AO\ 

'Oj 

■lol 

,ioi 

■09* 

■09i 

.09 

20.   Storm  Serge.  Navy  Blue 

■75 

•73 

■77 

•71 

79 

.69 

.81 

■67 

■83 

.65 

21.  Talljot  Flannel      .... 

•• 

■27 

.28 

■39 

•29 

38 

■30 

■n 

3' 

.36 

•32 

22.  Torchon  Lace 

doz. 

.65 

.70 

■75 

.80 

66 

■71 

.76 

.67 

■72 

•77 

23.    Velveteen  (24S)    .... 

vd. 

•35 

•25 

■34 

.26 

33 

■27 

•32 

.28 

■3' 

.29 

24.   Whipcord 

•• 

1. 10 

1.05 

1. 00 

•95       ' 

09 

1.04 

■99 

1.08 

1.03 

.98 

25.  Wash  Silk 

.50 

.60 

■5' 

•59 

52 

.58 

■53 

■57 

■54 

.56 

26.  Corduroy 

■75 

■74 

■63 

•73 

64 

•72 

.65 

■71 

.66 

.70 

Note.  —  Where  fractions  are  not  expressed  in  full  in  the  price  lists,  fourths  are  understood.     For  example: 

liabilities  as.sumed  by  the  new  firm,  are  shown  in  the  balance  sheet  of  Taylor  &  Wood  and 
the  accomi)anying  schedules,  given  above.  Your  investment  is  the  amount  of  the  cash  in 
safe.  (See  form  of  opening  journal  entry,  page  217,  and  note  carefully  all  of  the  details.) 
Inventory  account  is  one  of  the  subdivisions  of  the  Merchandise  account,  and  will  represent 
the  merchandise  inventories  in  this  work. 

Supporting  Records.  —  You  will  note  that  the  opening  entry  in  the  journal  contains  only 
a  brief  e.\()lanation  of  the  several  items  which  represent  the  assets  and  liabilities,  and  that  ref- 
erence is  made  to  other  records,  as  "  per  check  book  "  and  "  per  schedule."  These  records  arr 
in  detail,  and  support  the  record  made  in  the  journal.  Every  record  in  books  of  accounts 
should  be  comjjjete  in  itself,  or  should  be  supported  by  other  records  which  will  make  it 
complete. 

Make  an  entry  in  the  cash  book,  and  on  the  stub  of  the  check  book,  for  the  cash  in  bank. 
Enter  the  cash  which  you  invested,  writing  for  exjilanation,  investment  per  J,  and  check  the 
entry,  as  tiie  credit  to  your  accoiuit  will  be  jjostcd  from  the  journal.  These  entries  support 
the  record  in  the  journal. 

Enter  tiie  notes  receivable  and  notes  payable  as  per  schedules,  in  the  bill  book. 

Construct  (open)  accounts  in  the  general  ledger  and  post  the  opening  journal  entry. 
Allow  one-third  of  a  page  to  each  account.  Construct  the  partners'  capital  accounts  on 
page  I,  and  leave  page  2  for  their  personal  or  drawing  accounts,  to  be  opened  later.      For 


WHOLESALE   DRY   GOODS   BUSINESS 


229 


Dry  Goods  Business 


11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

I. 

IS 

->->*j 

■15- 

.22 

.21- 

.16 

.16'^ 

.21 

•7 

.20- 

■17- 

20 

.18 

.19- 

.182 

2.       I 

20 

1.32  ;  1. 19 

I-3I 

l.iS 

•  30 

1. 17 

1.29      I 

16 

1.28 

1.15      I 

27 

1. 14 

1.26 

'•13 

3- 

34^ 

.27 

■34 

■27- 

.28 

•33- 

■3i 

.?S' 

32- 

.29 

•32 

29' 

•3>-^ 

■30 

■31 

4-    4 

18 

4.06 

4.19 

4.07 

4.20 

4.08 

4.21 

4.09      4 

22 

4.10 

4-23      4 

II 

4.24 

4.12 

4.2s 

5- 

'3^ 

•'3' 

•'31 

•13' 

.11 J 

.ui 

.IlS 

.III 

"J 

•"s 

.11- 

lol 

.I03 

.loj 

.I02 

6. 

o83 

.o8| 

•08J 

.08^ 

•09} 

■09j 

.091 

.093 

09I 

•09S 

•09' 

loi 

.10' 

.10^ 

.I02 

7- 

70 

•59 

.61 

•57 

•63 

•55 

.65 

■53 

67 

•51 

.69 

73 

■72 

•74 

■71 

s.  i 

39 

•49 

.40 

.48 

.41 

•47 

.42 

.46 

43 

■45 

■44 

40 

.-,8 

•39 

.42 

9-  '  I 

82 

I. So 

1. 78 

1.76 

'•75 

1.74 

1.72 

1.70      I 

68 

1.62 

1.64    1  I 

56 

1.58 

1.66 

1.60 

!0. 

108 

•07' 

.til 

.08I 

.11- 

.o8-^ 

.11" 

.08^' 

09* 

.09I 

■09- 

loi 

.IO» 

.10- 

.07-^ 

II.      I 

65 

1.76 

1-74 

1.78 

1.72 

1.80 

1.70 

1.82      I 

68 

1.84 

1.66      I 

62 

1.63 

1.61 

1.64 

12.      I 

3' 

1. 21       1.30 

1.22 

1.29 

1.23 

1.28 

1.24      I 

27 

1. 25 

1.26  !  I 

30 

'•32 

1.31 

1.28 

13- 

ost 

■°5'       -oSi 

.053 

•07I 

•o7s 

.07' 

.073 

07] 

■07J 

.072 

oS' 

.081 

■°H 

.08-^ 

14.    I 

18 

1.20      1.22 

1.24 

1.25 

1.26 

1.28 

1.30      I 

32 

■  ■38 

1.36     I 

44 

1.42 

1.34 

1.40 

15.     I 

32 

1.08 

1.24 

1.06 

1.26 

1.04 

1.28 

1.02      I 

30 

1. 21 

1.29  'I 

23 

1 27 

1.25 

1.05 

16. 

■3' 

.16^ 

.12^ 

.15" 

.12-^ 

■'5- 

.12' 

•'5' 

1 4' 

.143 

•  14' 

13' 

.'3' 

•13- 

.161 

17. 

73 

.87 

•71 

.89 

.69 

.91 

.67 

•93 

65 

■74 

.66 

72 

.68 

.70 

.90 

18. 

47 

•57 

•45 

•55 

•43 

■53 

■41 

•51 

60 

•39 

•38 

37 

•63 

.61 

.62 

19- 

091 

•°9j 

.09' 

.09-^ 

.08 1 

•08 1 

.083 

.081 

08 1 

.08; 

.08- 

07 1 

.07^ 

■07| 

.07" 

20. 

76 

.66 

.78 

.68 

.80 

.70 

.82 

•72 

63 

.84 

•85 

86 

.60 

.62 

.61 

21. 

35 

■33 

•34 

.26 

.41 

•25 

.42 

■24 

43 

•39 

■34 

29 

•43 

•37 

.28 

22. 

68 

•73 

.78 

.69 

•74 

•79 

.81 

.87 

82 

.86 

■83 

85 

.84 

.72 

.69 

-3-  . 

30 

•36 

.50 

•37 

•49 

.38 

.48 

•39 

47 

.40 

.46 

41 

•45 

.42 

•44 

24.     I 

07 

1.02 

■97 

1.06 

1. 01 

.96 

•94 

.88 

93 

.89 

■92 

90 

•91 

1.03 

1.06 

25- 

55 

■49 

■35 

.48 

•36 

■47 

■37 

.46 

38 

•45 

•39 

44 

.40 

•43 

.41 

26. 

67 

.69 

.68 

.76 

.61 

■77 

.60 

.78 

59 

•63 

.68 

73 

•59 

.65 

■74 

12- me 

ans 

t2i  :  .0 

7^  mear 

it,^       All 

IS  .071 

.iqI  n 

1'      fr\r 

leans  .1 

0^ 

\tr\      TiiT-n 

itiii* 

:i     0  n  r  1 

ri  vti  1  r^ic 

lir> 

rc»^c    Q 

nrl     wrr. 

crrvnc 

interest,  real  estate,  insurance,  and  shipping  supplies.  For  all  others,  excepting  Inventory 
account,  write  balance.     No  explanation  is  necessary  for  the  Inventory  account. 

Arrange  an  index  for  the  three  ledgers  on  the  index  pages  of  blank  No.  2,  and  index 
your  general  ledger  accounts. 

Construct  accounts  in  the  sales  ledger  as  per  schedule  of  accounts  receivable,  and  enter 
the  balances.     Allow  one-fourth  of  a  page  to  each  account.     Index  the  accounts. 

Construct  accounts  in  the  purchase  ledger  as  per  schedule  of  accounts  payable,  and  enter 
the  balances,  allowing  one-third  of  a  page  to  each  account.     Index  the  accounts. 

You  have  now  completed  the  opening  of  the  books,  and  the  general  ledger  shows  the 
assets  and  liabilities  of  the  business  and  the  capital  or  investment  of  the  partners.  The 
purchase  and  sales  ledgers  show  the  accounts  with  creditors  and  debtors  in  detail,  and 
support  the  controlling  accounts  in  the  general  ledger. 

Test  the  accuracy  of  your  work  by  taking  a  trial  balance  of  the  general  ledger,  and  a 
proof  of  each  of  the  other  ledgers.  Carry  the  amount  of  cash  from  the  cash  book  to  your 
trial  balance.  Compare  the  footing  of  the  balances  of  the  purchase  ledger  with  the  balance 
of  Accts.  Payable  account,  and  the  footing  of  the  balances  of  the  sales  ledger  with  the 
balance  of  the  Accts.  Receivable  account,  to  see  if  they  agree. 

The  books  are  now  in  proper  form  to  receive  the  records  of  the  current  business. 


230  MODERN   IJ.LUSTRATIVE   HOOKKEEPING 

TRANSACTIONS 
August   i 

No.  2.  —  Invoice  of  W.  O.  Harrison,  Randolph,  being  overdue,  draw  a  sight  draft  on  him 
for  the  amount,  $750.     On  the  back  of  the  draft  make  indorsement  as  follows : 
Pay  to  tJic  Commercial  Bank,  or  order, 

Taylor,   Wood  &■  Co., 

Per  (Your  name). 
(Sign  the  firm  name  to  all  vouchers,  per  your  own  name.) 
Place  the  draft  in  Vouchers  for  Others,  or  leave  it  at  the  bank  for  collection. 

No.  3. — Give  a  check  for  the  amount  of  this  bill,  from  Tower  Mfg.  and  Stationery  Co. 
{Office  Supplies,  General  column  of  the  cash  book.     Place  the  bill  in  your  Voucher  File.) 

When  you  post  this  entry,  you  will  construct  an  OtSce  Supplies  account.  This  account  represents  a  sub- 
division of  the  Expense  account. 

No.  4.  —  Make  a  bill  for  this  order  from  B.  C.  Wiley,  and  enter  in  sales  book.  .  Note  the 
term.s.     ^'our  teacher  will  assign  you  a  price  list  from  the  lists  on  pages  228,  229. 

Indicate  on  the  bills  how  the  goods  were  shipped,  using  the  names  of  the  railroad  trans- 
portation companies,  and  express  companies  which  operate  through  your  city  or  town  ;  as, 
Wabash  K.R.,  Merchants  Despatch,  American  Exp.,  etc. 

The  orders  in  this  work  provide  excellent  practice  for  students  who  are  proficient  with  the  typewriter,  and 
the  bills  may  be  made  on  the  machine  instead  of  with  the  pen,  at  the  option  of  the  teacher. 

Terms,  67©  10  days,  ^'/,  30  days,  s  pes.  Monument  cotton,  62,  59,  58,  64,  63]  yds. 
2  pes.  Creton  plaid,  41,  38  yds.  3  pes.  French  crepon,  36,  40,  37  yds.  5  pes.  wash  silk,  48^, 
49i  51.  52,  51.]  yds.     2  pes.  Duchess  satin,  48,  51  yds.      10  doz.  lace. 

In  the  dry  goods  business  there  are  two  kinds  of  terms  for  different  classes  of  goods  —  regular  and  net : 
and  no  bills  are  to  run  more  than  sixty  days,  unless  they  arc  "X"  bills  or  carry  post  datings.  An  "X"  bill  is 
a  bill  on  which  an  extension  of  time  is  allowed,  usually  sixty  days  beyond  the  time  allowed  by  the  usual  terms. 
A  post-dated  bill  is  a  bill  which  is  dated  ahead,  after  the  delivery  of  the  goods.  Goods  (subject  to  post-dating) 
delivered  after  December  I,  carry  April  i  dating.  2';',.  10  days  net. 

Regular  terms  are  5%  30  days  (expressed  5/30)  and  6%  10  days.  Net  terms  are  2%  10  days  and  1%  30 
days. 

If  a  regular  bill  is  paid  in  thirty  days,  5%  discount  will  be  allowed  from  the  amount  of  the  bill ;  and,  if  paid  in 
ten  days,  6'%  will  be  allowed.  If  a  net  bill  is  paid  inten  days.  2%  will  be  allowed,  and  if  paid  in  thirty  days.  I  %. 
Extra  and  post-dated  bills  are  subject  to  but  one  discount,  namely.  2/10. 

In  this  work,  the  terms  will  be  given  for  each  sale. 

Before  an  order  is  sent  to  the  shipping  department  to  be  filled  it  is  passed  or  approved  by  the  credit  depart- 
ment, and  the  approval  is  indicated  on  the  order,  usually  by  means  of  a  rubber  stamp  containing  the  date,  the 
word  Approved,  and  the  initials  of  the  credit  man  or  of  his  assistant  who  approved  the  order. 

Only  the  actual  goods  shipped  are  billed,  and  the  bills  are  made  out  from  the  shipping  records  or  order  sheets, 
which  show  the  quantities  shii)pe(l,  the  routing  of  the  goods,  etc.  When  an  order  is  not  filled  complete,  ow- 
ing to  lack  of  stock,  the  unshipped  items  are  indicated  on  the  shipping  record  or  order  sheet.  These  unfilled 
parts  of  orders  are  known  .as  "back  orders'"  or  "  B  O's."  The  unshipped  items  are  indicated  by  the  letter  T 
(transfer)  placed  before  each  item.  Back  orders  are  handled  the  same  as  regular  orders  when  the  goods  re- 
quited to  fill  them  are  in  stock. 

It  will  be  a.ssumed  that  all  out-of-town  orders  are  shipped  by  freight  under  straight  bills  of  lading  m.ade  out 
by  the  shi])i)ing  clerk,  unless  othenvise  stated,  and  that  all  freight,  both  inw.ard  and  outward,  is  hauled  in  our  own 
wagons. 

Freight  companies,  unlike  express  companies,  do  not  call  for  or  deliver  goods.  Therefore,  all  freight  packages 
must  be  hauled  to  and  from  the  freight  houses  of  the  freight  transportation  companies. 


\vhr:)i.esale  drv  goods  business  231 

August    3 

No.  5.  —  Your  traveling  man,  II.  R.  Judson,  draws  $200  cash  for  expenses.  {Traveling 
Expiiiscs  in  the  General  column.) 

The  Traveling  Expenses  account  represents  a  selling  expense. 

In  this  work  both  the  salary  of  the  traveling  salesman  and  his  expenses  are  charged  to  Traveling  Expense.s, 
the  object  being  to  show  in  one  account  the  cost  of  securing  orders  by  means  of  traveling  salesmen  or  agents. 
Another  method  of  treating  these  two  items  would  be  to  keep  separate  accounts  with  Agents'  Salaries  and  Agents' 
Expenses. 

August   4 

No.  6.  —  Give  check  to  C.  H.  Garfield,  Agt.,  $  300,  for  rent  for  August.  {Rent  in  General 
column.) 

Rent  is  a  general  expense  item,  as  it  forms  no  part  of  the  expenses  of  selling  the  goods  or  of  administering 
the  busine.ss.  When  a  Rent  account  is  maintained  and  the  expenses  are  classified  it  is  placed  under  General 
E.xpenses  in  the  Profit  and  Loss  Statement  at  the  close  of  each  business  period. 

No.  7.  —  Sold  to  Geo.  M.  Walker,  City,  for  check,  i  piece  O.xford  gray  homespun,  50  yd. 
3  pes.  storm  serge,  43,  45,  46  yds.  i  piece  Duchess  satin,  50  yds.  3  pes.  surah  silk,  49],  4U, 
43  yds. 

Make  entry  in  the  cash  book,  crediting  Sales  in  special  column.  Enter  sale  in  sales 
book,  and  extend  total  into  Cash  column  ;  check  the  entries  as  in  previous  work. 

No.  8.  —  Check  from  L,  H.  Parker  in  full  of  invoice  of  July  18,  $826.30,  less  2% 
discoimt. 

Enter  on  the  debit  side  of  the  cash  book  as  follows:  $826.30  in  Accounts  Receivable 
column,  amount  of  discount  in  Discount  Allowed  column,  and  amount  of  check  in  Amount 
Received  column. 

No.  9.  —  Deposit  cash  $  2000,  and  checks  of  L.  H.  Parker  and  Geo.  M.  Walker.  Collec- 
tion, Jj  'I'l  of  Parker's  check.  {Collection  and  Exchange  in  special  column  of  the  cash  book.) 
Deduct  the  collection  from  the  amount  on  the  deposit  slip.  Make  proper  explanation  of 
the  cash  book  entry  to  support  the  record  in  the  check  book. 

You  will  keep  your  bank  account  on  the  stub  of  your  check  book,  the  same  as  you  did  in  the  Commission 
Business. 

Daily  Posting. — The  accounts  in  the  sales  ledger  should  be  kept  posted  to  date,  in  order 
to  have  them  show  their  true  current  condition.  This  is  important  both  to  the  credit 
dei)artment  in  approving  orders,  and  to  the  collection  department  in  handling  collections. 
This  requires  the  daily  posting  of  the  sales  book  and  of  the  Accounts  Receivable  items  in 
the  cash  book  and  journal.  The  items  in  the  invoice  book  and  the  Accounts  Payable  items 
in  the  cash  book  and  journal  should  also  be  posted  daily,  if  possible,  so  that  the  accounts  in 
the  purchase  ledger  will  show  their  true  current  condition.  The  items  in  the  general 
columns  of  the  cash  book  and  journal  may  be  posted  daily,  or  whenever  convenient,  but 
they  should  all  be  posted  in  time  to  permit  of  the  prompt  posting  of  the  monthly  footings  of 
the  principal  books,  and  of  the  prompt  taking  of  the  monthly  trial  balance.  The  cash  book 
should  be  proved  daily. 

You  will  keep  your  books  posted  and  your  cash  proved  to  date,  in  accordance  with  the 
above  suggestions.  In  posting  the  accounts  in  the  purchase  and  sales  ledgers,  enter  the 
terms  of  each  purchase  or  sale  in  the  explanation  column.  Review  carefully  the  instructions 
for  posting  the  items  from  the  various  books,  under  Books  to  Keep,  pages  216  to  22r.     In 


232  MODERN'   ILLUSTRATIVE   B<X>KKEEPING 

constructing  new  accounts  allow  the  same  spaces  in  the  ledgers  as   for  similar  accounts 
already  constructed.     After  completing  your  daily  i)osting,  check  the  posting. 

August  6 

No.  10.  —  Make  a  check  in  favor  of  Little  Falls  Woolen  Co.  for  invoice  of  July  15, 
^409,  less  discount  5  '/ . 

Enter  on  the  proper  side  of  the  cash  book  as  follows:  S./09  in  Accounts  Receivable  col- 
umn, amount  of  discount  in  Discount  Allowed  column,  and  amount  of  the  check  in  Amount 
J-'aid  column. 

No.  11. —  Note  from  W.  B.  Snow,  in  payment  of  balance  due  Aug.  i. 

( IV.  />'.  Snoiv,  amount  in  Accounts  Receivable  column  of  the  journal.)  Make  entry  in 
the  bill  book,  and  write  /;//.  over  the  luiniber  of  days  in  the  Time  column. 

No.  12.  —  Discount  Snow's  note  at  the  Commercial  Bank,  and  receive  credit  for  the 
proceeds. 

Find  the  interest  on  S  536.88  for  the  full  time,  and  add  it  to  the  face  of  the  note;  then 
find  the  discount  to  maturity  on  that  amount.  Enter  in  the  General  column  on  both  sides 
of  the  cash  book,  —  Xotes  Receivable  and  Interest ;  Discount.  Indorse  the  note  in  full  to  the 
Commercial  Bank,  leave  it  at  the  bank,  and  have  the  net  proceeds  credited  in  your  bank 
pass  book.  Add  the  proceeds  to  your  bank  balance  on  the  left  stub  of  the  check  book. 
If  there  is  no  bank,  make  the  entr)-  yourself  in  your  bank  jiass  book,  and  place  the  note  in 
Vouchers  for  Others. 

Remember  to  make  ])roi)er  explanation  of  these  entries  to  support  the  record  in  the  check 
book. 

No.  13.  —  This  is  what  is  known  as  a  shipper's  order  (freight  C.  O.  D.)  Bill  the  goods 
to  Ingham  &  Case  in  the  usual  way.  Note  the  terms.  4  pes.  Talbot  flannel,  44,  40,  45, 
47  yds.  2  pes.  storm  serge,  48,  42  yds.  4  pes.  corduroy,  40^,  49,  47^,  39  yds.  2  pes. 
surah  silk,  A,l\,  46]  yds. 

No.  13  a.  —  Make  a  sight  draft  in  favor  of  the  Union  National  Bank  for  the  amount  of 
your  bill,  pin  it  to  the  order  bill  of  lading,  and  send  it  to  the  Union  National  Bank.  (Place 
in  Vouchers  for  Others.) 

For  various  rea,sons  it  is  often  desirable  to  make  the  collection  of  the  ]iurchase  price  before  the  goods  are 
delivered  to  the  customer.  Such  shipments  by  express  are  sent  C.  O.  D..  and  by  freight,  subject  to  shipper's 
order.  It  is  customary  to  collect  in  tliis  manner  when  the  credit  of  the  customer  is  limited,  or  has  not  been 
fully  investigated. 

Returns  on  freiglit  C.  O.  D.'s.  or  shippers'  orders,  are  usually  made  by  bank  draft  which  is  issued  and 
remitted  by  the  bank  to  whose  order  the  goods  were  consigned. 

When  a  shipment  is  made  by  express  C.  O.  D.,  the  returns  are  received  in  currency  or  by  express  money 
order,  or  express  check.  If  the  shipment  is  handled  by  more  than  one  express  company,  the  returns  are  made 
in  currency,  which  is  placed  in  the  original  C.  O.  D  envelope  and  delivered  to  the  shipper  by  the  express 
company  which  first  received  the  goods.  On  straight  C.  O.  D's.  that  is  shipments  which  are  handled  by  only 
one  express  comp.my.  the  returns  are  made  by  express  money  orders,  or  special  express  C.  O.  D.  checks,  and 
these  are  .sent  through  the  mail  in  the  original  C.  O.  I),  envelopes  direct  to  the  shippers.  These  money  orders 
and  checks  can  be  cashed  at  the  offices  of  the  express  companies,  whicli  issue  them,  or  they  may  be  deposited 
in  the  bank.  Except  by  special  agreement  between  shipper  and  consignee,  which  must  be  noted  on  the 
C.  O.  U.  envelope  accom])anving  the  shipment,  express  companies  will  not  accept  p.iyment  for  C.  O.  D.  ship- 
ments in  any  form  other  than  currency. 

Goods  shipped  by  express  may  be  put  up  in  paper  packages,  or  inclosed  in  boxes,  at  the  option  of  the 
shipper;  but  if  shipped  by  freight,  they  must  l>e  boxed,  baled,  or  crated,  unless  in  car  load  lots,  or  the  nature  of 
the  goods  is  such  that  they  can  be  handled  and  transported  without  being  damaged. 


I 


WHOLESALE    DRY    GOODS    BUSLVESS  233 

No.  14.  —  Invoice,  Burke,   FitzSimons,   Hone  &  Co.     Check  the  items,   O.   K.  the  bill, 

and  paste  it  in  the  invoice  book.      Note  the  terms. 

Invoices  should  be  attached  to  the  leaves  of  the  invoice  book  in  such  a  way  that  any  of  them  can  be  quickly 
found,  readily  referred  to,  and  easily  removed.  They  may  be  attached  in  the  order  in  which  they  are  passed  by 
the  bookkeeper ;  by  serial  number  or  department  letter ;  or  arranged  in  sections  according  to  departments  or 
to  the  names  of  the  creditors.  The  latter  method  is  not  desirable  when  the  invoice  book  is  used  as  an  original 
book  of  entry  or  posting  book,  unless  the  posting  is  done  before  the  invoices  are  pasted  into  the  invoice  book. 

The  tirst  invoice  in  the  book  should  be  gummed  on  the  upper  edge,  and  the  others  on  the  lower  edge. 

No.  15. — Check  from  Jas.  H.  Wood  &  .Son  in  payment  of  invoice  of  July  28,  5550,  less 
2  '/(   discount.     (Enter  as  in  No.  8.) 

No.  16.  —  Mr.  Taylor  draws  $200  cash  for  his  private  use.  (//.  W.  Taylor,  Personal, 
amount  in  General  column.)  Construct  an  account,  H.  VV.  Taylor,  Personal,  when  you 
post  this  entry. 

No.  17.  —  Pay  freight  bill  54.36,  in  cash.     {Freight  Inward  in  General  column.) 

Transportation  companies  usually  require  that  freight  charges  be  paid  before  the  goods  can  be  removed 
from  the  freight  house,  but  frequently  arrangements  are  made  whereby  this  requirement  is  waived,  and  the 
freight  charges  are  paid  after  tlie  removal  of  the  goods. 

In  the  absence  of  an  agreement,  the  transportation  charges  are  paid  by  the  purchaser. 

Payments  for  freight  and  cartage  on  goods  bought  are  properly  chargeable  to  Purchases,  as  these  items 
increase  the  cost  of  the  goods.  Since,  however,  we  want  to  know  both  the  first  cost  of  the  goods  and  the 
freigln  paid  on  them,  we  charge  Purchases  for  the  invoice  price  from  the  invoice  book,  and  contruct  (open)  a 
Freight  Inward  account,  and  charge  all  payments  made  on  inbound  freight  to  that  account  from  the  cash  book. 
Tlie  amount  or  balance  of  Freight  Inward  account  will  be  added  to  Purchases  at  the  end  of  the  business  period. 

Some  bookkeepers  add  the  freight  to  the  invoice,  and  include  the  amount  in  the  montlily  posting  to  Pur- 
chases from  the  Invoice  book. 

August  8 
No.  18.  — Check  from  J.  G.  Smith  in  full  of  account  to  Aug.  i. 
No.  19.  —  Deposit  the  checks  on  hand.      Bank  charges  $2  for  collection. 
No.  20.  —  Pay  Sibley,  Lindsay  &  Curr  Co.  tor  invoice  of  July  28,  $3200.      Deduct   5% 
discount,  and  write  a  check  for  the  net  amount. 

August  10 

No.  21.  —  Cash  sales.  Perkins  &  Brown,  50  doz.  Torchon  lace.  40  gross  smoked 
pearl  buttons. 

Carroll  &  Marsh,  i  piece  whipcord,  50  vds.      i  piece  plain  French  poi^lin,  40  yds. 

Strong  &  Carlisle  (check),  3  pieces  black  Venetian  cloth,  },6,  38,  40  yds.  2  pes.  broad- 
cloth, 55,  59  yds.     (See  No.  7.) 

Remember  to  prove  the  cash  daily,  and  to  keep  your  books  posted  to  date. 

August   i  i 

No.  22.  —  Check  from  B.  C.  Wiley  for  invoice  of  July   15,   8122.44,  less  1%  discount. 

No.  23. — Two  pieces,  43  and  38  yds.,  of  the  French  crepon  received  from  Burke,  Fitz- 
Simons, Hone  &  Co.  on  the  6th  inst.  are  found  to  be  damaged.  Return  the  two  pieces  to 
them,  billing  at  cost  price.     Write  a  letter  and  inclose  the  bill. 

Enter  in  the  journal,  debiting  Burke,  FitsShnons,  Hour  &•  Co.  in  Accounts  Payable 
column,  and  crediting  Returned  Pitrcliases  in  the  General  column.  For  explanation  write 
Returned  Purchases,  page  ii6. 


234:  MOUliKN    ILLLSTKAIUE    liOOKKEEPIXG 

In  this  work  merchandise  returned  by  us  will  be  credited  to  the  Returned  Purchases  account,  and  goods 
returned  to  us  charged  to  Returned  Sales. 

Separate  books,  called  Return  Books,  are  generally  kept  for  detailed  records  of  goods  returned,  and  the 
entries  in  these  books  are  transferred  to  the  journal  in  the  form  given  above.  The  accounts  Returned  Pur- 
chases and  Returned  Sales  are  subsidiary  to  the  Purchases  and  Sales  accounts,  and  are  offsets  to  those  accounts. 

Forwarding.  —  When  a  page  of  the  journal,  sales  book,  invoice  book,  or  cash  book  is  about 
full,  rule  a  red  line  across  the  dollar  and  cent  columns  on  both  sides  and  foot  all  the  columns. 
Place  the  footings  on  the  first  blue  line  below  the  red  line,  with  the  word  "  Ford."  in  the 
explanatory  space,  also  in  red  ink.  Transfer  the  footings  in  black  ink  to  the  first  blue  line 
at  the  top  of  the  following  page,  writing  "  Hrot.  Ford."  on  the  same  line  in  the  explanatory 
space,  in  black  ink. 

August  12 

No.  24.  —  Note  received  from  Brown  &  Wilson  on  account.  (Notes  Receivable  and 
Accounts  Receivable  columns  in  journal.) 

No.  25.     -  Pay,  by  check,  invoice  of  Gimbcl  Bros.,  July  15,  S  1250,  less  i  '/,' . 

No.  26.  —  Cash  sales.  National  Emporium,  5  pes.  wash  silk,  47],  49.1,  53,  54,  46J  yds. 
2  pes.  cashmere,  41,  39  yds. 

Sherman  &  Co.,  2  pes.  French  crepon,  43,  ^y  yds.  6  pes.  24S  velveteen,  40,  45,  36,  38, 
45.  46  yds. 

August   13 

No.  27.  —  Ten  shares  of  Wamsutta  Mills  stock  is  offered  at  private  sale  at  S  105  per 
share,  to  close  an  estate,  and  the  firm  has  decided  to  purchase  the  stock  as  an  investment. 
Give  J.  L.  White,  Trustee,  a  check  for  the  amount  of  the  stock,  and  place  the  stock  certificate  in 
Voucher  File.     (  U'ainsiittii  Mills  Slock,  General  column  of  cash  book.) 

When  stocks  and  bonds  arc  purchased  for  investment  by  a  mercantile  or  manufacturing  concern,  an  account 
may  be  constructed  to  represent  each  class  or  kind  of  security :  as  Stocks,  Bonds.  Aiiierimn  LocoDiolh'C  /'re- 
ferred, U.S.  S/eel  Coininon,  Baltimore  &"  Oliio  Gold  4s.  or  a  Securities  account  may  be  constructed  to  rejjre- 
sent  all  such  investments. 

No.  28.  —  Check  received  from  Sibley  &  Co.  in  payment  of  invoice  of  July  20,  $  1540, 
less  I  %  discount. 

No.  29 — The  bank  has  collected  your  draft  of  the  ist  inst.  on  W.  O.  Harrison,  $750. 
Collection  charges,  75  ^.     Proceeds  placed  to  your  credit. 

Credit  W.  O.  Harrison  in  the  cash  book  for  the  full  amount  of  the  draft,  and  debit  Col- 
lection and  E.vchangc.  Add  the  proceeds  to  your  bank  balance.  Make  proper  e.xplanation 
of  the  entries. 

August   14 

No.  30.  ^  Check  from  Wilson  &  Randolph  for  note  and  interest  due  to-day.  Consult 
your  bill  book  and  mark  the  note  paid. 

No.  31.  —  Salesman's  orders.     Note  the  terms. 

Thompson  &  Bulkeley,  Easton,  6  pes.  Fruit  of  Loom  sheeting,  58,  60,  55,  64,  66,  58  yds. 
8  pes.  Monument  cotton,  54,  58,  68,  62,  55,  65,  63,  60  yds.  50  doz.  Coates  thread.  5  pes. 
wash  silk,  48I,  50J,  52,  48],  55  yds. 

James  H.  Wood  &  Son,  Newton,  6  pes.  pique  muslin,  68.1,  66,  74,  75,  71,  70]  yds.  4  pes. 
broadcloth,  57,  65,  66,  sr  yds.     2  pes.  Creton  plaid,  40,  42  yds.     25  doz.  torchon  lace. 

Brown  &  Wilson,  Troy,  5  pes.  sateen,  48.!,  47^,  50,  ^,<b\,  50  yds.  5  pes.  Crown  lining, 
52,  58,  53.  55.  57  yds.     25  doz.  Coates  thread. 


\VHt)I.ESALE    DRV    GOODS    BUSINESS  235 

C.  H.  Roberts,  VVestboro,  3  pes.  kersey,  54  in.,  45,  48,  43  yds.  20  gross  smoked  pearl 
buttons. 

No.  32. — 7  Invoice  of  merchandise  purchased  of  the  Little  Falls  Woolen  Co. 
No.  33.  —  Mr.  Wood  withdraws  $225  cash  for  private  use.     (See  No.  i6.) 
No.  34. —  Pay  Sibley,   Lindsay  &  Curr  Co.,  by  check,  for  invoice  of  July  14,   $904.85, 
less  I  9f   discount. 

No.  35.  —  Deposit  cash,  $200,  and  all  checks.     Collection,  Si-JS- 

August  15 

No.  36. —  Pay  cash  for  office  supplies,  stamps,  etc.,  S  18.60.  Shipping  clerks  and  porters, 
S70.  Office  help,  $  100.  (Charge  payment  for  office  supplies,  etc.,  to  C^a' .S///>///Vi-,-  foroffice 
help  to  Office  Salaries ;  and  for  shipping  clerks  and  porters  to  Shipping  Dept.  Salaries.) 

Shipping  Dept.  Salaries  account  represents  a  selling  expense,  and  Ofifice  Salaries  account  an  administrative 
expense. 

No.  37. — -Invoice  of  merchandise  from  Sibley,  Lindsay  &  Curr  Co. 
No.  38.  —  Check  from  Carlton,  Sons  &  Co.  for  the  net  amount  of  invoice  of  July    16. 
No.  39.  —  Make  your  check  in  favor  of  Little  Falls  Woolen  Co.,  for  invoice  of  July  29, 
S  300,  less  2  \',   discount. 

August   17 

No.  40.  —  This  remittance  is  for  proceeds  of  the  draft  of  the  6th  inst.  on  Ingham  &  Case, 
sent  to  the  Union  National  Bank  for  collection.     Charges  for  collection,  50,'-'. 

Sometimes  the  collection  charges  "follow"  the  drat't,  and  are  then  paid  by  the  drawee.  In  such  cases  the 
draft  is  drawn  as  usual,  and  the  words  '"and  exxhange  "  are  written  on  it. 

No.  4L  —  Cash  sales.  Geo.  M.  Walker,  City,  50  gross  smoked  pearl  buttons,  i  piece 
Duchess  satin,  48  yds. 

H.  W.  Johnson  &  Son,  City,  i  piece  plain  French  poplin,  50  yds.  i  piece  Oxford  gray 
homespun,  48  yds. 

No.  42.  — Pay  freight  to  date  on  goods  received  per  agent's  request,  by  check,  Si 3.04. 
(See  No.  17.) 

August   i  8 

No.  43.  —  Check  from  C.  F.  Jenkins  for  note  and  interest  due  to-day. 

No.  44 Invoice  of  merchandise  purchased  from  Granite  Mills. 

No.  45.  —  Check  from  Harris  &  Smith  on  account.     (No  discount.) 
No.  46.  —  Deposit  all  checks  and  drafts.     Collection,  $2. 
No.  47.  —  Draw  $  100  in  cash  for  your  own  private  use. 

No.  48.  —  Remit  Burke,  FitzSimons,  Hone  &  Co.  check  in  payment  of  invoice  of  July 
22,  S 2837.90,  less  I  ')',   discount. 

August  19 

No.  49.  —  Pay  freight  bill  in  cash,  $1.19. 

No.  50.  —  W.  O.  Harrison  is  unable  to  settle  his  account  at  present,  and  it  has  been  de- 
cided to  take  his  note,  with  interest,  for  the  balance  due  from  him,  $932.12. 

No.  5L  —  Pay  cash  for  i  ton  hay  and  5  bu.  oats  for  stable,  313.50.     {Delivery  Expenses.) 

When  you  post  this  item  you  will  construct  a  Delivery  Expenses  account.  This  account  represents  a  selling 
expense. 


236  MODERN    ILLUSTRATIVE   BOOKKEEPING 

ACGUST   20 

No.  52.  —  Memorandum  order  from  J.  G.  Smith.  8  pes.  denim,  38|.  39, 41  J,  46,  35,  37I, 
35,  42  yds.  7  pes.  sateen,  48,  45,  46^,  50,  49.I,  51^,  49  yds.  5  pes.  sheeting,  60,  62,  65,  55, 
59  yds.  8  pes.  Crown  lining,  52,  55,  54,  56,  60,  51,  58,  50  yds.  4  pes.  Duehess  satin,  48}, 
49],  52,  50  yds.     4  pes.  blue  flannel,  50,  48,  49,  54  yds.     10  gross  buttons. 

No.  53.  —  Salesman's  order  from  L.  W.  Chase.  5  pes.  denim,  38.',,  41,  42,  37.',,  43  yds. 
4  pes.  blue  flannel,  51,  47,  55^,  46|  yds.  3  pes.  cashmere,  39,  41,  42  yds.  8  pes.  Fruit  of 
Loom  sheeting,  58,  60,  60,  61,  57,  63,  65,  55  yds.  7  pes.  pique  muslin,  68.  72,  75,  70,  65, 
68,  70  yds. 

No.  54.  —Give  Sibley,  Lindsay  &  Curr  Co.  your  note  at  20  days  (no  interest),  S2500. 

No.  55.  —  Pay  Granite  Mills,  by  cheek,  for  invoice  of  July  21st,  S904.85,  less  S  "^l . 

No  56  —  Purchase  of  merchandise  from  Gimbel  Bros. 

August  21 

No  57.  — One  piece  of  kersey,  46J  yds.,  received  on  the  20th  inst.  from  Gimbel  Bros.,  is 
damaged.     Return  it,  and  render  your  bill  for  the  same  at  cost  price.    ( Enter  as  in  No.  23. ) 

No.  58.  —  Check  from  Warren  &  Co.,  to  prepay  their  note  of  S325.  less  discount  to 
maturity.     Mark  the  note  prepaid  in  the  bill  book. 

Make  proper  e.xplanatioii  of  the  entries  to  show  tliat  they  are  supported  by  the  vouclier. 

No.  59.  —  Salesman's  orders.  Brown  &  Wilson,  Troy,  2  pes.  Talbot  flannel,  45,  42| 
yds.  2  pes.  whipcord,  40.],  43I  yds.  5  pes.  Monument  cotton,  58,  63,  65,  60,  62  yds.  6  pes. 
denim,  38,  43,  37,  44,  40,  36  yds. 

Sibley  &  Co.,  Gardner,  2  ')',.  10  days,  i  "Jp  30  days,  6  pes.  Fruit  of  Loom  sheeting,  60,  63, 
55.  58,  65,  61  yds.  2  pes.  corduroy,  40,  34.]  yds.  2  pes.  black  Venetian  cloth,  38,  33^  yds. 
50  doz.  Coates  thread. 

B.  C.  Wiley,  Waverly,  6  'I,  10  days,  5  *},'  30  days,  3  pes.  O.xford  gray  homespun,  48,  50, 
5i|  yds.  4  pes.  cashmere,  36,  38.],  42,  43.',  \-ds.  7  pes.  Crown  lining,  50,  54,  58,  52,  55,  51, 
57  yds.     6  pes.  sateen,  45,  50,  49,  53,  48,  49  yds.     50  doz.  lace. 

August  22 
No.  60. — Check  from  Jas.  H.  Wood  &  Son  for  invoice  of  July  21,  $466.42,  less  5  9c. 
No.  6L  —  Pay  freight  bill  in  cash,  S4.58. 

August  24 

No.  62.  —  Note  from  Lewis  W.  Chase  on  account. 

No.  63.  —  Draw  a  sight  draft  on  Brown  &  Wilson  for  invoice  of  July  15,  $504.11,  and 
leave  it  at  the  bank  for  collection. 

No.  64  -Make  a  check  in  favor  of  Little  Falls  Woolen  Co.,  in  full  for  your  note  and 
interest  due  to-day.     Write  them  a  letter  and  inclose  the  check. 

No.  65.  —  Remit  Gimbel  Bros,  check  for  invoice  of  July  29,  S  1293. 80,  less  5  9'  discount. 

August  25 
No.  66.  —  Salesman's  orders.    Carlton,  Sons  &  Co..  Dansville,  2  '/  10  days,  i  *;,'  30  days, 
2  pes.  broadcloth,  60,  58  yds.     4  pes.  Creton  plaid,  37,  39i,  41.  38  yds.     5  pes.  sateen,  47, 
51,  48,  4^,  46  yds.     3  pes.  black  Venetian  cloth,  48^.  35.],  34  yds.     100  gross  buttons. 


WHOLESALE   DRV   GOODS    DUSIXESS 


237 


L.  H.  Parker,  Lima,  30  days  net,  2  pes.  whipcord,  40,  42  yds.  6  pes.  Fruit  of  Loom 
sheeting,  56,  64,  58,  62,  59,  62  yds.  5  pes.  Monument  eotton,  58,  59,  57,  62,  60  yds.  8  pes. 
pique  musUn,  70,  72,  65,  75,  69,  73,  66,  68  yds.      i  piece  broadcloth,  60  yds. 

W.  B.  Snow,  Akron,  2  7©  10  days,  i  %  30  days,  6  pes.  wash  silk,  47I,  48,  46.],  49,  53|, 
55  yds.  3  pes.  surah  silk,  47^,  49I,  52  yds.  3  pes.  corduroy,  36,  38,  37  yds.  6  pes.  Crown 
lining,  52,  56|,  55^,  57,  50,  54  yds. 

Levy  &  Garson,  Somersworth,  6  %  10  days,  5  '/,'  30  days,  90  gross  buttons.  40  doz. 
thread.     2  pes.  plain  French  poplin,  48,  42  yds.      i  piece  kersey,  40  yds. 

No.  67.  —  Invoice  of  merchandise  purchased  of  Sibley,  Lindsay  &  Curr  Co. 

August  26 
No.  68.  —  Discount  Chase's  note  received  on  the  24th  inst.,  and  have  proceeds  credited. 
No.  69.  —  Remit  Gimbel  Bros,  your  note  at  30  days  for  $2000,  to  apply  on  account. 
(No  interest.) 

No.  70.  —  Purchase  of  merchandise  from  Little  Falls  Woolen  Co. 

August  28 

No.  7L  —  Receive  credit  at  the  bank  for  draft  on  Brown  &  Wilson,  $504.1 1,  left  for  col- 
lection Aug.  24th.     Collection  charges,  50  <. 

No.  72.  —  Fill  the  following  telephone  order  received  from  Harris  &  Smith,  City.  Terms, 
2' J,  10  days,  I  ',,  30  days.  4  pes.  Talbot  flannel,  44,  45.],  45,  43  yds.  3  pes.  velveteen,  36. 
32,  38]  yds.  2  pes.  unbleached  cotton,  60,  62  yds.  3  pes.  Fruit  of  Loom  sheeting,  61,  60, 
6O2  yds.     25  gross  smoked  pearl  buttons. 

August  30 

No.  73.  —  Carlton,  Sons  &  Co.,  Dansville,  return,  for  credit,  the  goods  as  per  their  bill. 
{^Retiinifd  Sales.     See  No.  23.) 

When  returned  goods  have  been  duly  accepted,  it  is  customary  to  send  what  is  called  a 
"  credit  memorandum."     Send  Carlton,  Sons  &  Co.  a  credit  memorandum  for  these  goods. 

Form  of  Credit  Memor.wdum 

New  York,  Aug.  19,  19—. 


Memorandum  of  Amount  placed  to  the 
Of  Taylor,  Wood  &  and  Co. 


CREDIT 

By  The  H.  B.  CLAFLIN  CO. 


pes.     Blk,     Cashmere,     90  yds 


,75 


67    50 


No.  74.  —  Check  from  Sibley  &  Company  on  account. 

No.  75. — Cash  sale.  W.  E.  Dennis  &  Co.,  City  (check),  i  piece  storm  serge,  48  yds. 
4  pes.  velveteen,  38,  36,  37,  39  yds.  2  pes.  French  crepon,  40,  38  yds.  2  pes.  cashmere, 
41,  37  yds.      I  piece  surah  silk,  48  yds.     3  pes.  wash  silk,  49,  56,  45  yds. 


•S^S  .M(-»Ut.RN    ILLLMKATIVE   BOOKKEEPING 

No.  76.  —  Deposit  all  checks.  Collection  S  150.  Draw  currency  for  office  use,  by  check. 
(Make  the  check  payable  to  Casli.) 

August  31 

No.  77.   —Pay  freight  bill  in  cash,  S3.49. 

No.  78.  —  Pay  cash  for  horseshoeing  and  repairs  on  wagon,  S  5.43.     (Delivery  Expenses.) 

No  79. — Pay  H.  R.  Judson  by  check  for  August  salary,  S150  (see  No.  5),  and  K.  F. 
Nol.m  by  check  for  rent  of  stable  for  August,  S  50.     (Delivery  Expenses.) 

No.  80. —  Pay  office  help,  S  100,  shipping  clerks  and  porters,  S70,  and  teamster,  S44.50 
in  cash. 

The  wage.s  of  the  teamster  are  a  delivery  expense. 

No.  81.  — (Student)  draws  S  100  by  check  for  private  use. 

A  month's  salary  is  now  due  each  partner,  as  per  partnership  agreement.  Frame  proper 
journal  entry.     {Office  Salaries.) 

Salaries  of  the  partners  are  an  aciiiiinislrative  expense,  and  do  not  affect  their  capit  il  accounts. 

You  will  now  complete  the  daily  posting  to  the  three  ledgers,  including  all  the  General 
column  items  in  the  cash  book  and  journal.  Preparatory  to  posting  the  monthly  footings, 
prove  the  cash,  and  rule  up  and  close  the  books  of  original  entry,  as  explained  and  illustrated 
on  pages  216  to  222.  Be  sure  that  your  footings  are  correct  and  that  the  total  of  the  two 
sides  of  the  journal  are  alike. 

In  constructing  new  accounts  give  each  account  in  the  sales  ledger  one-fourth  of  a  page, 
and  in  the  purchase  ledger  and  general  ledger,  one-third  of  a  page. 

Since  all  the  entries  in  the  sales  book  and  invoice  book,  and  all  the  General  column 
entries  in  the  journal  and  cash  book,  have  been  posted  in  the  daily  posting,  there  remain  to 
be  posted  only  the  footings  of  the  invoice  book  and  sales  book,  and  the  footings  of  the 
special  columns  in  the  journal  and  cash  book.     These  are  all  general  ledger  items. 

Invoice  Book.  —  The  closing  entry  in  the  invoice  book  is  Purchases,  (Dr.),  S ,  Accounts 

Payable,  (Cr. ).     Post  these  items. 

Sales  Book.  — The  closing  entry  in  the  sales  book  is  Accounts  Receivable  (Dr.),  S , 

Sales,  (Cr. ).     Post  these  items. 

Journal. — The  closing  entry  in  the  journal  contains  the  debit  items.  Accounts  Payable, 

S ,  and   \otes   Receivable,  S ;  and  the  credit  items,  Accounts   Receivable,  S , 

and  Notes  Payable,  S .      Post  these  items.  ,'_ 

Cash  Book.  —  The  closing  entry  in  the  cash  book,  on  the  debit  side,  contains  the  credit 

items.  Accounts  Receivable,  S ,  Discount  on  Purchases,  S ,  and  Sales,  S ;  and 

on  the  credit  side,  the  debit  items,   Accounts   Payable,  $ ,  Discount  on   Sales,  S , 

Collection  and  E.xchange,  S ,  and  Purchases,  $ .     Post  these  items. 

Having  completed  the  monthly  posting,  check  the  posting,  after  which  pencil  foot  the 
accounts  in  the  general  ledger  jjreparatory  to  taking  a  trial  balance. 

Trial  Balance.  — Take  a  trial  balance  of  balances  of  the  general  ledger  and  include  in  it 
the  cash  balance  as  shown  by  your  cash  book.  Pencil  foot  the  accounts  in  the  purchase 
ledger  and  sales  ledger,  e.\tend  the  balances  into  the  Balance  column,  and  make  a  schedule 
of  balances  of  each  of  these  ledgers  on  loose  journal  paper.  After  making  the  schedules, 
prove  them  by  comparing  the  footings  with  the  balances  of  the  controlling  accounts, 
Accounts  Payable  and  Accounts  Receivable,  in  the  general  ledger. 


WHDLKSAI.E    DRY   GOODS    BUSINESS  239 

Monthly  trial  balances  are  generally  taken  for  the  purpose  of  testing  the  accuracy  of  the  posting,  but  they 
may  also  serve  for  other  purposes.  The  trial  balance,  which  is  taken  at  the  end  of  a  business  period  called  the 
ante-closing  trial  balance,  and  the  schedule  of  the  inventories  of  assets  and  liabilities,  taken  at  the  same  time, 
contain  the  data  from  which  the  statements  of  the  condition  and  results  of  the  business  are  made. 

No.  81a.  —  Assuming  that  the  checks  issued  on  Aug.  31  are  outstanding,  make  a  bank 
voucher  slip,  similar  to  that  received  in  the  Commission  Business,  and  after  entering  tlie 
total  in  the  pass  book,  balance  and  rvile  up  that  book,  and  reconcile  yoiu"  bank  balance. 

Dissolution  of  Partnership.  —  Mr.  Taylor,  having  decided  to  retire  from  business,  has 
arranged  with  his  nephew,  Mr.  I'rank  H.  Taylor,  an  e.xperienced  dry  goods  man,  to  take  over 
his  interest  on  September  i,  and  Mr.  Wood  and  yourself  have  agreed  to  the  arrangement. 

Closing  the  Books.  —  In  business  the  books  are  closed  at  the  end  of  a  fiscal  period,  usually 
annually,  and  also  in  an  individual  or  partnership  business,  when  a  legal  change  takes  place 
in  the  business. 

Inventories.  —  Inventories  are  taken  for  the  purpose  of  ascertaining  the  quantities  or 
values,  or  both,  of  property  on  hand,  or  of  assets  or  liabilities,  which  are  not  shown  by  the 
books. 

Merchandise  inventories  are  usually  taken  quarterly,  semiannually,  or  annuall)-  at  the 
end  of  a  business  period.  A  quarterly  or  a  semiannual  inventory  of  merchandise  is  usually 
taken  for  stock  purposes,  and  quantities  only  are  considered.  This  is  necessary  when  no 
stock  books  are  kept;  and  when  they  are  kept,  the  quantities  shown  by  the  physical  inven- 
tories are  compared  with  the  quantities  shown  by  the  stock  books. 

The  value  of  merchandise  on  hand  is  usually  determined  by  adding  to  the  invoice  cost 
of  this  merchandise,  the  cost  of  acquisition  —  i.e.  freight  and  cartage. 

When  any  of  the  goods  on  hand  have  become  damaged,  or  unsalable,  for  any  reason, 
proper  allowance  should  be  made  for  this  condition  in  the  inventory,  in  order  that  it  will 
represent  its  true  asset  value  for  the  period.  In  making  all  property  inventories  it  is  better 
to  be  conservative  in  the  matter  of  values  rather  than  to  overestimate  or  inflate  them, 
thereby  causing  the  records  to  show  fictitious  profits. 

In  order  to  determine  the  true  profit  of  any  business  period,  only  the  expenses  which 
belong  to  the  period  should  be  charged,  and  only  the  profits  which  belong  to  the  jaeriod 
should  be  credited.  The  expense  accounts  in  the  trial  balance  may  show  more  or  less 
charged  or  credited  than  rightfully  belongs  to  the  period  and,  therefore,  adjustments  must 
be  made  in  these  accounts  before  the  true  profits  can  be  ascertained. 

For  this  reason,  inventories  are  taken  of  property  on  hand  at  the  end  of  the  period,  which 
has  been  charged  as  expenses,  such  as  shipping  supplies,  office  supplies,  etc.,  and  accrued 
assets  and  liabilities  are  determined,  such  as  interest  on  notes  receivable  and  notes  payable, 
unpaid  insurance,  rent  due  and  unpaid,  etc.,  and  the  amounts  are  carried  to  their  respective 
accounts.  Depreciation  of  property  is  treated  in  the  same  way  when  no  Reserve  for  De- 
preciation of  property  account  is  maintained. 

Keeping  up  Stock. —  It  is  important  in  every  mercantile  business  to  have  on  hand,  at  all 
times,  an  adequate  stock  of  goods,  with  which  to  fill  all  orders  promptly,  and  in  order  to  be 
able  to  do  this,  it  is  necessary  that  some  reliable  system  of  reporting  stock  on  hand  to  the 
buying  department  be  maintained. 

The  nature  of  the  business  and  the  ease  or  difficulty  with  which  stock  can  be  replenished 
will,  in  a  measure,  determine  what  system  of  stock  reporting  will  be  required  for  that  busi- 
ness.    Some  concerns  can  safely  rely  upon  the  quarterly  inventories  for  the  necessary  infor- 


240  MODERN   ILLUSTRATIVE   BOOKKEEPING 

mation  concerning  the  condition,  as  regards  quantities  of  the  stock,  while  others  are  obliged 
to  have  monthly,  weekly,  or  daily  stock  reports. 

Where  stock  books  are  kept,  reports  can  be  easily  made  from  the  books;  where  such 
records  are  not  kept,  it  is  necessary  that  the  stock  clerks,  or  warehouse  clerks,  make  fre- 
quent reports  of  the  stock  in  their  departments.  This  is  usually  done  on  stock  report  sheets 
or  slips,  which  may  contain  merely  the  names  of  the  goods  and  the  quantities  on  hand ;  or 
they  may  contain  a  statement  of  the  minimum  and  maximum  quantities  required  by  the 
manager,  which  are  based  on  i^ast  sales  or  special  demands,  and  the  quantities  received 
since  last  report,  and  any  other  information  that  may  be  desired. 

Stock  reporting,  also,  serves  to  guard  against  "  overstocking." 

In  anticipation  of  the  change  in  the  firm,  inventories  have  been  taken  of  all  of  the  assets 
and  liabilities  of  the  business  not  shown  on  the  books,  which  are  as  follows: 

Invkntokies,  August  31,   19 — 
Assifs 
Merchandise,  per  schedule  No.  5,  $23525.05 

Furniture  and  F"i.\tures,  cost,  S2500. 

Depreciation,  i  '/,  ,  25.  2475. 

Horses  and  Wagons,  cost. 

Depreciation,  i  '/, , 
Shipping  supplies,  per  schedule  No.  9, 

Office  supplies,         ' 8, 

Insurance,  ccst. 

Earned, 
Interest  accrued  on  notes  receivable, 
Real  Estate,  cost, 

Appreciation, 
Rent  due  on  fiat, 
Wamsetta  Mills  stock, 

Appreciation, 

Interest  accrued  on  notes  payable,  166.67 

You  will  now  prepare  statements  of  the  business  in  accordance  with  the  instructions 
which  follow. 

Trading  and  Profit  and  Loss  Statement.  —  In  the  preceding  work,  these  statements  were 
called  statements  of  losses  and  gains,  and  statements  of  resources  and  liabilities.  In  this 
work,  the  former  will  be  called  the  Trading  and  Profit  and  Loss  Statement  (see  form  on 
pages  242  and  243),  and  the  latter,  the  Balance  Sheet  (see  form  on  pages  244  and  245). 

The  first  section  of  the  Trading  and  Profit  and  Loss  Statement  will  be  referred  to  as  the 
Trading  account,  and  the  other  sections  as  the  Profit  and  Loss  account.  The  Trading 
account  shows  the  gross  \nof\t  on  trading.  This  account  shows,  on  the  debit  side,  the 
items.  Inventory  at  beginning  of  present  period,  purchases  for  the  present  period,  freight 
paid,  goods  returned  from  ])urchases,  and  inventory  at  close  of  present  period.  The  credit 
side  shows  the  goods  sold  during  the  period,  and  the  goods  returned  from  sales. 

Adding  to  the  amount  of  the  inventory  at  the  beginning  of  the  present  period,  the  pur- 


750. 

7.50 

74-^50 

196.50 

182.75 

275. 

7.50 

267.50 

12.75 

12000. 

, 

250. 

12250. 

100. 

1050. 

TOO. 

1 1  50. 

WHOLESALE   DRY   GOODS   BUSINESS  241 

chases  and  the  cost  of  acquisition  (freight),  and  from  this  amount  deducting  the  amount  of 
the  returns  and  the  inventory  at  the  close  of  the  present  period,  gives  the  cost  of  the  goods 
sold  during  the  present  period,  or  the  "turnover."  The  difference  between  the  proceeds  of 
the  sales  and  the  cost  of  the  goods  sold  represents  the  gross  trading  profit,  which  should  be 
written  in  red  ink.  The  balance  of  the  trading  account,  or  gross  profit  on  trading  is  brought 
down  in  the  first  section  of  the  Profit  and  Loss  account  in  black  ink. 

Prepare  a  Trading  account  from  your  trial  balance  and  merchandise  inventory,  after 
which  rule  it  off  as  shown  in  the  form. 

There  is  considerable  difference  of  opinion  among  accountants  as  to  wliat  should  be  included  in  the  Trading 
section  of  the  Trading  and  Profit  and  Loss  Statement.  Some  contend  tliat  this  section  should  sliow  only  the 
trading  activities  of  the  business  and  the  prime  cost  of  the  turnover,  the  difference  between  which  is  the  true 
gross  profit  on  trading.  This  is  the  opinion  of  leading  .American  and  EngHsh  accountants,  and  is  in  accordance 
with  the  practice  followed  in  this  book. 

Other  accountants  include  in  the  Trading  section,  in  addition  to  the  main  items  mentioned  above,  the  cash 
discounts  on  purchases  and  on  sales  ;  while  some  include  all  expenditures  directly  connected  with  sales,  or  which 
directly  reduce  the  price  realized  for  the  goods,  but  do  not  include  the  cash  discount  on  purchases. 

In  matters  of  this  kind,  however,  as  in  many  others  connected  with  business  records,  the  wishes  of  the  owners 
or  directors  of  the  business  should  be  observed  by  the  accountant. 

The  first  section  of  the  Profit  and  Loss  account  shows,  on  the  debit  side,  the  deductions 
from  the  gross  trading  profit,  which  comprise  selling  expenses,  general  and  administrative 
expenses,  interest  and  discount  allowances  to  others,  and  depreciation  of  property.  The 
credit  side  shows  the  gross  trading  profit  and  the  interest  and  discount  allowances  to  us. 
The  difference  between  the  two  sides  of  this  section  shows  the  net  trading  profit,  which  is 
entered  in  red  ink,  and  brought  down  to  the  ne.xt  section  in  black  ink. 

Property  in  use  is  certain  to  depreciate,  and  in  almost  every  business  losses  are  sure  to  occur  from  the  failure 
of  some  debtors  to  pay  their  obligations  in  full. 

Since  no  Reserve  for  Depreciation  of  property  account  is  maintained  in  this  business,  the  depreciation  of 
furniture  and  fixtures  and  of  horses  and  wagons  will  be  charged  direct  to  the  Profit  and  Loss  account  in 
closing.     (See  explanation  of  Reserve  accounts,  page  244. ) 

Prepare  the  first  section  of  the  Profit  and  Loss  account,  taking  the  amounts  from  your 
trial  balance  and  schedule  of  inventories.      Rule  off  the  section. 

The  second  section  of  the  Profit  and  Loss  account  shows,  on  the  credit  side,  the  items 
real  estate,  Wamsetta  Mill  stock  and  rent,  which  have  no  connection  with  the  dry  goods 
business.  These  are  investment  items,  while  the  items  in  the  preceding  section  are  revenue 
items.  After  the  profit  from  investment  is  added  to  that  from  business,  we  have  the  total 
net  gain  of  the  partnership. 

Prepare  the  second  section  of  your  Profit  and  Loss  account  and  rule  it  off. 

The  last  section  of  the  account  shows  the  disposition  of  tJie  net  profit,  a  part  of  which 
has  been  set  aside  as  a  reserve  for  bad  debts,  a  part  deducted  for  allowances  for  interest  on 
the  partners'  net  capital,  and  the  remainder  divided  equally  among  the  partners. 

It  has  been  decided  to  reserve  out  of  the  profits  of  this  period  one  per  cent  of  the 
amount  of  the  outstanding  Accounts  Receivable  for  bad  debts.  Enter  this  amount  in  the 
section. 

Compute  the  interest  on  the  partners'  accounts  according  to  the  partnership  agreement 
and  enter  the  net  amounts  in  the  account.  (See  partnership  agreement,  page  226.)  Com- 
plete the  Profit  and  Loss  account,  after  which  foot  and  ride  off  the  section  and  submit  the 
Trading  and  Profit  and  Loss  Statement  to  \'our  teacher  for  approval. 


MipliKkN    ll.LLM  RATIVE    BOOKKEEPING 


Trading,  and 
Dow,  Jones  &  Co., 


Inventory  Aug.  i 
Purchases 
Freif,'.t  Inward 

Deduct 
Returns 
Inventory  .Aug.  31 

Cost  of  sales 
Cross  profit  on  trading 

Selling  Expenses 

Traveling  Expenses 
Shipping  Department  Salaries 
Delivery  Expenses 
Shipping  Supplies,  cost 
Inventory  Aug.  31 
General  and  .Xdministrative  Expenses 
Office  Salaries 
Office  Supplies,  cost 

Inventory  Aug.  31 
Office  Expenses 
Rent 

Insurance,  cost 
Unearned 

Interest  accrued  on  notes  pay. 
Less  credit  balance 

Discount 

Collection  and  Exchange 

Discount  on  Sales 

Depreciation  as  under 

Furniture  and  Fixtures 
Horses  and  Wagons 
Net  profit  on  trading 

Net  profit 


Disposition  of  net  profit 
Reserve  for  bad  debts 
Interest  Dow's  Capital 
"       Jones'       '• 
'•       Cox's        " 
Dow    J  net  profit 
Jones  \    "      " 
Cox     \    '•      " 


27598.69  ! 

2763-47  !,    I 
126.98  \  30489  14 

156.66  f 

24641.85 :  24798  jj_' 


435 

1    ■ 

150 

'3'  34 

329-70 

■ 

279.80 

49 

50 

766 

24 

1 

475 

315-75 

23525 

80 
25 

50 

200 

150. 

135- 

'5 

«92-53 

165.15 

i   27  38 
31  09 

1  .  53  96 

35 

«5' 

965 

507 

55 

■ 

40 

2329 

'9 

,• 

'534 

go 

'534 

90 

i6s 

213  59 

'79  83 

57  61 

306  29 

306  29 

306 

29 

_i5.34 

2? 

1 ;  u 

<)0 

WHOLESALE    DRY    GOODS   BUSINESS 


243 


Profit  .and  Loss  St.\tement, 
Aug.  31,   19— 


Sales 

Deduct 
Retuiiis 

Net  sales 


Gross  protit  on  trading,  down 

Discount  on  purchases 

Interest  accrued  on  notes  receivable 


Net  profit  on  trading,  down 
Real  estate,  present  value 
Rent  due 

Cost 
United  Dry  Goods  Stock,  market  value 
Cost 


Net  profit,  down 


8205 
643 


7562 


7562    12 


1871 

436 

21 

49 
>3 

57 

2329 

19 

2329 

19 

10500. 
100. 

597 

375 
562 

40 

SO 

1534 

10600. 
10225. 

1 1400. 
10837.50 

qo 

'534 

90 

1534 

90 

•534 i  90 

244 


MUUtKN    ILl.LMKAllVL    i;0(.iKK.t;EPl.\G 


Balance  Sheet, 


Assets 
Casli  on  hand 
in  bank 
United  Dry  Goods  Stock,  market  value 
Notes  Receivable,  per  schedule  No.  3 
Interest  accrued  on  above 
Accounts  Receivable,  considered  good 
doubtful 

less  reserve  for  bad  debts 
Merchandise,  per  inventory,  schedule  No.  5 
Shipping  supplies,  per  schedule  No.  6 

Office  •        No.  7 

Insurance  unearned 

Horses  and  Wagons,  per  schedule  No.  8 
Furniture  and  Fixtures.         "         No.  9 
Real  Estate.  Tenement  •  61  Jones  St. 
Total  assets 


116. 
S97^- 


24 
57 


'343' 
165 

1359''-' 
165 


24 


24 


9088 

81 

1 1400 

2577 

S4 

•>  1 

57 

'343' 

24 

24641 

85 

279 

80 

=35 

-5i 

'35 

S25 

3-/3 

10600 


765II 


^7651 1  36 


Reserve  Accounts.  —  Reserves  are  apportionments  of  the  earnings  of  a  business  withheld 
from  the  net  profits,  and  are  credited  to  reserve  accounts,  which  are  created  to  sup])ort  di- 
minishing assets,  such  as  depreciation  of  property,  or  to  meet  contingencies,  such  as  losses 
which  occur  from  unforeseen  causes. 

A  general  Reserve  for  Depreciation  account  may  be  raised  to  support  the  former  con- 
dition, and  a  general  Reserve  for  Contingencies  account  raised  to  support  the  latter  possi- 
bility ;  but  it  is  customary  to  raise  special  reserve  accounts  for  particular  purposes,  which 
are  indicated  in  the  titles  of  the  accounts,  such  as  Reserve  for  Depreciation  of  Office 
Equipment,  Reserve  for  Bad  Debts,  Reserve  for  Collections. 

When  reserve  accounts  are  maintained  and  the  depreciation  of  any  propertv  is  written 
off,  the  depreciation  account  is  debited  for  the  amount,  and  the  property  account  is  credited  ; 
and  when  a  contingent  loss  occurs,  the  amount  is  charged  to  the  proper  reserve  account 
and  credited  to  the  account  through  which  the  loss  occurred. 

Interest  on  Partners'  Investments. —  Under  the  partnership  agreement,  interest  is  to  be 
allowed  the  partners  upon  the  capital  contributed  less  interest  on  their  withdrawals.  (See 
page  226.)  The  purpose  of  this  allowance  is  to  reduce  to  an  equitable  basis  the  unequal  con- 
tributions by  the  partners  to  the  cajjital.  The  interest  allowed  the  partners  is  not  an 
expense  for  conducting  the  business,  and  the  net  profit  is  determined  regardless  of  the 
adjustment  of  the  partners'  accounts.  Ivich  partner  is  credited  in  the  last  section  of  the 
Profit  and  Loss  Statement  witli  the  amount  of  interest  allowed  on  his  capital,  and  the  total 
of  these  amounts  becomes  a  charge  to  Profit  and  Loss  account. 

Balance  Sheet.  —  Having  completed  your  Trading  and  Profit  and  Loss  Statement,  you 
will  next  make  a  Balance  Sheet  from  your  trial  balance  and  schedule  of  inventories.     (See 


AYHOLESALE   DRY   GOODS   BUSINESS 

Dow,  Jones  &  Co.,  August  31,   19— 


245 


Liabilities 
Notes  Payable,  per  schedule  No.  4 
Interest  accrued  on  above 
Accounts  Payable,  per  schedule  No.  2 
Total  liabilities 

Dow.  Capital  % 

add  interest  on  capital 
"     ^  net  profit 

less  debit  balance  personal  "/c 
net  capital 
Jones.  Capital  ",(• 

add  interest  on  capital 
"     3  net  profit 

less  debit  balance  personal  % 
net  capital 
Cox.  Capital  % 

add  interest  on  capital 
"     \  net  profit 

"     credit  balance  personal  % 
net  capital 
Total  liabilities  and  capital 


15400 

192 

'7354 


21372 

213 
306 


21892    75 
22c 


15087    04 


179 
306 


15573 
175 


60C0 

57 
306 

•35 


16 


32946 


55 


'1667 


15398 


6498 


90 


765iJ_l.36 


form  of  Balance  Sheet,  pages  244  and  245.)  The  debit  side  shows  the  current  and  fi.xed 
assets  of  the  business,  and  the  credit  side  shows  the  current  liabilities,  and  the  net  capital, 
or  present  worth,  of  the  proprietors. 

In  making  up  your  Balance  Sheet  arrange  the  assets  in  the  order  of  floating  and  fi.xed. 
(See  Assets  and  Liabilities,  page  225.)  Begin  with  current  assets,  and  follow  with  the  others 
in  the  order  in  which  they  could  be  most  easily  realized,  or  converted  into  cash.  Arrange 
the  fixed  assets  in  the  order  in  which  they  could  be  most  easily  realized. 

Arrange  the  floating  liabilities  in  the  order  in  which  they  would  have  to  be  met.  It  is 
customary  to  state  Notes  Payable  first  on  the  Balance  Sheet,  and  Accounts  Payable  next. 

Since  the  business  has  no  fixed  liabilities,  none  will  appear  in  your  Balance  Sheet. 

State  the  separate  interests  of  the  partners  as  shown  in  the  form. 

After  completing  the  Balance  Sheet  rule  it  off,  and  submit  it  to  your  teacher  for  approval. 

Closing  the  Ledger  by  Journal  Entries. —  Heretofore  you  have  closed  the  ledger  by 
making  red  ink  and  cross  entries  directly  in  the  accounts.  This  is  called  "direct  closing." 
In  this  work  you  will  close  the  ledger  by  passing  the  entries  through  the  journal  ;  that  is, 
by  making  the  closing  entries  in  the  journal  and  posting  them  to  the  general  ledger  in  the 
regular  way.  This  dispenses  with  red  ink  and  cross  entries  in  the  ledger,  and  conforms  to 
the  now  well-established  accounting  axiom  that  "no  entry  should  be  made  in  the  ledger 
except  through  some  book  of  original  entry." 

The  first  step  in  closing  the  ledger  will  be  to  dispose  of  the  accounts  represented  by  the 
items  in  the  first  section  of  your  Trading  and  Profit  and  Loss  statement,  or  Trading  account. 

The  entries  which  you  will  make  in  the  journal,  for  each  section  of  the  Trading  and  Profit  and  Loss 
statement,  will  correspond  to  the  red  ink  entries  which  you  would  make  in  the  ledger  if   you  were  to  close  the 


240  MODERN   ILLUSTRATIVE  BOOKKEEPING 

ledger  by  direct  closing.  Therefore,  determine  wli.it  red  ink  entries  you  would  make  for  these  accounts  by 
direct  closing,  and  make  corresponding  entries  (in  black  ink)  in  the  journal,  debiting  or  crediting  Protit  and 
Loss  for  the  total,  or  net  amount,  instead  of  for  each  amount,  as  you  would  do  by  direct  closing. 

Your  Trading  account  shows  the  following  debit  items :  sales,  returned  purchases,  in- 
ventory (close  of  present  period);  and  the  following  credit  items:  inventory  (beginning  of 
present  period),  purchases,  returned  sales,  freight  inward,  and  profit  and  loss  for  the  gross 
profit. 

Frame  the  journal  entry,  using  the  explanation  To  close,  after  each  item,  exxepting  the 
inventory  iteins,  for  which  write  the  dates  of  the  respective  periods. 

When  this  entry  has  been  posted,  the  accounts  represented  by  the  Trading  account  will 
balance,  and  the  Profit  and  Loss  account  will  show  the  gross  trading  profit  for  the  ])eriod. 

Some  accountants  construct  a  Trading  Account  account  in  the  ledger,  and  carry  to  it  the  items  which  appear 
in  the  trading  section  of  the  Trading  and  Profit  and  Loss  statement,  and  transfer  the  balance  to  Profit  and  Loss 
account.  The  effect  is  the  same  in  either  case,  but  since  the  statement  shows  all  the  trading  facts  in  detail,  and 
can  be  referred  to  inore  readily  and  conveniently  than  could  a  book,  many  accountants  regard  it  unnecessary  to 
keep  a  Trading  Account  account. 

The  next  step  will  be  to  dispose  of  the  accounts  represented  by  the  items  in  the  first 
section  of  the  Profit  and  Loss  account.  In  order  to  have  these  accounts  show  their  true 
profits  and  losses  for  the  period  it  will  be  necessary  first  to  enter  in  their  respective  accounts 
the  amounts  of  the  asset  and  liability  inventories  as  shown  by  the  schedule  of  inventories. 

Frame  a  journal  entry  debiting  Sundry  Inventories  (for  the  total  amount  of  the  credits) 
and  crediting  Furniture  and  P'ixtures,  Hor.ses  and  Wagons,  Shipping  Supplies,  Office 
Supplies,  Insurance,  and  Interest  for  the  individual  amounts.  For  explanation  write  Sundry 
Inventories,  to  close. 

Next  frame  a  journal  entry  debiting  Interest  and  crediting  Sundry  Inventories  for  the 
amount  of  the  interest  liability,  as  shown  in  the  schedule.  Make  explanation  similar  to  that 
for  the  preceding  entry. 

Next  frame  a  journal  entry  for  the  credit  items  in  the  first  section  of  the  account,  debit- 
ing Discount  on  Purchases  and  Interest  for  the  amounts  shown,  and  Loss  and  Gain  (for  the 
difference  between  the  amount  of  the  debit  iteitis  and  the  amount  of  the  credit  items  in  the 
entry);  and  crediting  the  debit  items  for  their  respective  amounts.  For  explanation  write 
Profit  and  Loss  to  close.  When  this  entry  has  been  posted,  the  accounts  represented  by  the 
section  will  balance,  and  the  balance  of  Profit  and  Loss  accoimt  will  show  the  net  trading  profit. 

The  second  section  of  the  Profit  and  Loss  account  shows  on  the  credit  side  the  item- 
Real  Estate,  Rent,  and  Wamsetta  Mills  stock,  and  by  referring  to  the  schedule  of  inventories, 
we  find  that  these  are  included  in  the  assets.  Frame  a  journal  entry,  debiting  Sundry  In- 
ventories and  crediting  Real  Estate  (two  items,  present  value  and  rent  accrued)  and  Wam- 
setta Mills  stock,  with  proper  explanation. 

Next  frame  a  journal  entry  debiting  the  credit  items  for  the  gains  shown  in  the  second 
section  of  the  account,  and  crediting  Profit  and  Loss,  with  proper  explanation.  When  thi- 
entry  has  been  posted,  the  accounts  represented  by  the  .section  will  balance,  and  the  balance 
of  the  Profit  and  Loss  account  will  show  the  net  jirofit  of  the  firm. 

The  last  section  of  the  statement  shows  on  the  credit  side  the  net  profit  of  the  firm,  and 
on  the  debit  side,  the  items.  Reserve  for  Had  Debts,  Interest  on  partners'  capital,  and  the 
partners'  net  gains. 

The  net  profits  of  a  business  m.ay  be  credited  to  the  capital  accounts,  thereby  increasing  the  working  capital 
of  the  business,  or  they  m.\v  be  credited  to  the  personal  accounts  of  the  partners  and  withdr.iwn,  or  used  to  otT>' 
withdrawals.     In  this  work  the  net  profits  will  be  left  in  the  business  and  credited  to  the  partners"  capital  accouni- 


WHOLESALE    DRY   GOODS   liUSIXESS  247 

Frame  a  journal  entry  debiting  Loss  and  Gain  for  the  net  profit  and  crediting  Reserve 
for  Bad  Debts,  and  the  partners'  capital  accounts  for  the  interest  amounts  and  for  their 
respective  shares  of  the  net  profit,  with  proper  explanation. 

When  this  entry  has  been  posted  the  Profit  and  Loss  account  will  balance,  as  will  also 
all  profit  and  loss  (nominal)  accounts. 

Frame  a  journal  entry  debiting  each  partner's  capital  account  for  the  balance  of  his  personal 
account  and  crediting  his  personal  accoimt  for  the  amount. 

Post  the  above  journal  entries. 

Foot  and  rule  off  all  general  ledger  accounts  that  balance.  Rule  off  by  single  lines  the 
item  in  Inventory  account  which  represents  the  inventory  at  the  beginning  of  the  present 
period. 

Close  the  partners'  cajntal  accounts  by  red  ink  entry,  writing  for  explanation  net  capital. 
Rule  off  the  accounts  and  bring  down  the  balances  in  the  usual  way.  See  if  these  balances 
agree  with  the  Balance  Sheet. 

The  closing  of  the  capital  accounts  by  direct  entry  instead  of  by  journal  entry  is  apparently  a  violation  of  the 
accounting  axiom  mentioned  on  page  245.  but  these  entries  do  not  affect  any  other  account  and.  therefore,  cannot 
be  journalized. 

You  have  now  completed  the  closing  of  the  ledger,  and  the  accounts  represent  the  assets 
and  liabilities,  and  the  capital  of  the  business.  A  part  of  the  assets  and  liabilities,  however,  are 
represented  by  the  Sundry  Inventories  account,  which  controls  the  separate  accoiuits  to  which 
these  inventories  belong.  In  order  to  have  the  separate  accounts  represent  their  true  assets 
and  liabilities  at  the  beginning  of  the  next  period,  as  shown  by  the  Balance  Sheet,  it  will  be 
necessary  to  credit  or  charge  them  with  the  amounts  of  the  inventories  represented  by  the 
controlling  account. 

From  your  Balance  Sheet  frame  a  journal  entry  under  date  September  i,  ig — ,  debiting 
the  asset  balances  represented  by  the  Sundry  Inventories  account,  and  crediting  that  account 
for  the  total  amount.  For  explanation  write  "  Balance."  Frame  another  entry  debiting 
Sundry  Inventories  for  the  amount  of  the  liability  balance  and  credit  Interest  account  for 
the  amount,  with  proper  explanation. 

Post  the  above  entries,  and  rule  off  the  Sundry  Inventories  account. 

Post-closing  Trial  Balance.  —  A  post-closing  trial  balance  is  a  trial  balance  of  the  general 
ledger  taken  after  it  has  beeti  closed  for  a  business  period. 

You  will  now  take  a  post-closing  trial  balance  of  your  general  ledger,  and  submit  it  to 
your  teacher  for  approval. 

Before  proceeding  further,  read  again  the  paragraphs  relating  to  the  purchase  journal, 
sales  journal,  and  the  bill  and  charge  system,  pages  221  and  222. 


WHOLESALE    DRY    GOOD.S    BUSINESS  —  Gw//;^?/.vi' 

PRELIMINARY   'WORK 

Septe.mber   I,   1 9 — 

Henry  W.  Taylor  has  this  day  withdrawn  from  the  firm  of  Taylor,  Wood  &  Co.,  and  a 
new  firm  has  been  formed,  consisting  of  Clark  F.  Wood,  (Student),  and  Frank  H.  Taylor,  to 
continue  the  business  heretofore  conducted  under  the  name  of  Taylor,  Wood  &  Co.  Henry 
W.  Tavlor  has  assigned  his  interest  in  the  old  business  to  Frank  H.  Tavlor  as  of  this  date. 


248  MiUitkN    ll.l.rSTKAIIVL    l;c"iKKEEriNG 

and  articles  of  copartnership  have  this  clay  been  executed  by  the  partners  of  the  new 
business. 

According  to  the  articles  of  copartnership  the  new  partnership  agreement  is  the  same  as 
the  old  one  (see  page  225),  excepting  that  Wood  is  to  receive  a  salary  of  S200  a  month,  (Stu- 
dent), S225,  and  Frank  H.  Taylor,  S  150.  There  is  to  be  no  change  in  the  style  of  the  firm 
name,  and  the  capital  of  the  new  firm  is  to  be  the  same  as  that  of  the  old  one,  as  shown  by 
its  books,  closed  as  of  Aug.  31,  19 — .  The  capital  of  Henry  W.  Taylor  in  the  old  business 
is  to  become  the  investment  of  Frank  II.  Taylor  in  the  new  business.  The  books  of  the 
old  firm  are  to  be  used  as  the  books  of  the  new  firm,  and  are  to  be  closed  annually,  as  of 
September  30. 

Make  a  brief  statement  of  the  above  conditions  in  your  journal  under  date  Sept.  i,  19 — , 
and  frame  an  entry  to  transfer  Henry  W.  Taylor's  interest  to  Frank  H.  Taylor,  making 
proper  explanation  of  the  entry.  Post  the  entry,  and  rule  off  the  account  of  Henry  W. 
Taylor.     Set  up  the  new  capital  account  under  the  old  one. 

Books  Kept.  —  You  will  use  the  same  books  for  September  as  you  did  for  August,  except- 
ing the  sales  book,  which  will  be  replaced  by  the  sales  journal;  and  the  purchase  journal 
will  be  added  to  the  set. 

TRANSACTIONS 

SeI'TE.MBER     1 

No.  82.  —  Check  from  Isaac  Holman  &  Sons  in  payment  of  note  due  to-day. 

No.  83.  — A,  B,  C.  Duplicate  charge  bills.  Jas.  H.  Wood  &  Son  ;  Thompson  &  Bulkeley ; 
Sibley  &  Co.  Enter  the  bills  in  the  sales  journal,  beginning  with  the  number  100,  and 
number  all  succeeding  bills  consecutively. 

Head  your  sales  journal,  Sc/il.  /,  ig — .  Enter  only  tlie  .serial  number  of  tlie  bill,  name  of  the  purchaser,  and 
the  amount  of  tlie  bill,  extending  the  amount  into  the  Items  column  and  the  daily  total  into  the  Total  column. 
The  separate  entries  in  the  sales  journal  will  not  be  posted,  but  the  footing  will  be  posted  at  the  end  of  the  month. 

Post  from  the  charge  bills  directly  to  the  accounts  in  the  sales  ledger,  in  the  daily  posting,  and  place  the 
folio  of  the  account  ^  each  bill  to  indicate  that  it  has  been  charged.  Remember  to  enter  the  terms  in  the  ac- 
count.    Cash  sales  bills  will  not  be  entered  in  the  sales  journal.     Place  the  bills  in  your  Voucher  File. 

No.  84. — Send  II.  R.  Judson,  your  traveling  salesman,  check  for  $75  for  traveling 
expenses. 

September  2 

No.  85 —  Cash  from  E.  V>.  Kerns  for  rent  of  flat,  #  74  Center  St.,  August  and  September, 
$  200.     ( Real  Estate  % . ) 

No.  86.  — Check  from  Levy  &  Garson  for  invoice  of  Aug.  25,  loss  6%. 

No.  87.  —  Invoice  from  Burke,  FitzSimons,  Hone  &  Co.  Enter  the  invoice  in  the  ])ur- 
chase  journal.     Number  this  invoice  i. 

Head  your  purchase  journal  the  .same  as  you  did  your  sales  journal,  number  the  entries  conseaitively,  and 
enter  only  the  name  of  the  creditor  and  the  amount  of  the  invoice.  Write  the  entry  number  on  the  upper  right- 
hand  corner  of  the  invoice.  The  separate  entries  in  the  purchase  journal  will  not  be  posted,  but  the  footing  of 
the  book  will  be  posted  at  the  end  of  the  month.  Post  from  the  invoices  directly  to  the  accounts  in  the  purchase- 
ledger,  in  the  daily  posting,  and  place  the  folio  of  the  account  on  each  invoice  to  indicate  that  it  has  been  cred- 
ited.    Remember  to  enter  the  terms  in  the  account. 

No.  88. —  Pay  invoice  Burke,  FitzSimons,  Hone  &  Co.,  due  to-day,  as  follows  :  Deduct 
from  the  amoimt  of  the  invoice  the  charge  for  goods  returned  on   Aug.  11,  as  per  ledger. 


WHOLESALE   DRY   GOODS   BUSINESS  249 

and  from  this  amount  deduct  i  %,  as  per  terms  of  bill.  Write  a  check  for  the  net 
amount. 

No.  89.  —  An  order  was  received  to-day  from  Ingham  &  Case,  but  as  they  owe  a  balance 
which  has  been  running  a  long  time,  it  was  not  deemed  advisable  to  sell  them  rfiore  goods 
on  account.  In  response  to  our  telegram  they  instructed  us  to  ship  the  goods  subject  to 
bank  order,  and  allow  special  cash  discount. 

No.  89  a.  —  Make  a  sight  draft  favor  of  Commercial  Bank  for  the  net  amount  of  the  bill, 
pin  it  to  the  bill  of  lading,  and  leave  both  at  the  bank  for  collection.  Treat  the  transaction 
as  a  charge  sale. 

No.  90.  —  Duplicate  charge  bill.     C.  H.  Roberts. 

No.  91.  —  Check  from  Harris  &  Smith  to  ap[)ly  on  account. 

September  5 
No.  92.  —  Duplicate  cash  bill.     Weston  &  Hill,  City  (check).     Enter  in  cash  book  only. 
No.  93.  —  Deposit  all  checks.      Bank  charges  for  collection,  75^ 
No.  94.  —  Duplicate  charge  bill.     W.  O.  Harrison  ;  terms,  6%  10  ds.,  5  %  30  ds. 

September  6 
No  95.  — Invoice  from  Burke,  FitzSimons,  Hone  &  Co.     (See  No.  8/.) 
No.  96. — Pay   Little  Falls   Woolen  Co.,  by  check,  for   invoice   of   Aug.    12,  ^163.22, 
less  I  %. 

No.  97.  — This  check  from  Jas.  H.  Wood  &  Son  is  on  account. 

September  7 
No.  98.  —  Check  from  Sibley  &  Co.  is  in  full  for  bill  of  July  25. 

No.  99.— A,  B,  C.  Duplicate  charge  bills.  B.  C  Wiley;  Carlton,  Sons  &  Co.;  L.  H. 
Parker. 

No.  100.  —  Duplicate  charge  bill.      Burke,  FitzSimons,  Hone  &  Co.  for  goods  returned. 
No.  101.  — Check  from  Brown  &  Wilson  for  note  due  to-day. 

September  8 
No.  102.  —  Invoice  from  Sibley,  Lindsay  &  Curr  Co. 
No.  103. —  Send  check  to  Sibley,  Lindsay  &  Curr  Co.,  for  note  due  to-morrow. 

September  9 
No.  104.  —  Mr.  Taylor  draws  $200  from  the  business,  by  check,  for  personal  use. 
No.  105.  —  Note  from  Harris  &  Smith  to  apply  on  account. 

No.  106.  — Received  notice  from  your  bank  that  the  draft  of  3d  inst.  on  Ingham  &  Case 
has  been  paid.     Collection,  yoK 

Note.  —  When  in  doubt  as  to  how  to  clas.sifv  a  transaction,  refer  to  the  entry  of  a  similar  transaction  in  the 
August  work. 

September  10 
No.  107.  —  Bill  from  L.   H.  Parker,  Lima,  for  goods  returned.     Send  L.  H.  Parker  a 
credit  memorandum. 

No.  108.  —  Mr.  Wood  draws  S250,  by  check,  for  personal  use. 


250  MODKRN    ll.LLSTkATlVE   15O0KKEEPING 

September  12 

No  109  —A,  B.     Duplicate  cash  sales  bills.     T.  D.  Winch,  and  Allen  &  Co. 

No.  110. —  Deposit  S300  currency  and  all  checks.     Collection  charges,  $1.25. 

No.  111.  —  Send  Sibley,  Lindsay  &  Curr  Co.  a  check  for  34484.23,  in  payment  of  invoice 
of  July  14. 

No.  112.  —  Ingham  &  Case  have  paid  no  attention  to  letters  from  Mr.  Taylor  regarding 
the  scltlement  of  their  account.  Make  a  sight  draft  on  them  for  S66.35  and  leave  it  at  the 
bank  for  collection.     Write  in  pencil,  in  their  account  in  the  ledger,  Sight  draft,  9,  12. 

September    13 
No.  113.  — Check  from  W.  O.  Harrison  for  bill  of  Sept.  5,  less  6%. 
No.  114.  —  Pay  cash  for  stamps  and  office  supplies,  S  10. 
No   115.  —  Check  from  Lewis  \\.  Chase  to  apply  on  account. 

September  14 
No.  116.  —  Draw  for  your  own  personal  use,  $150,  by  check. 
No.  117.  —  Invoice  Gimbel  Bros. 

No.  118. —A.  B,  C.  Duplicate  charge  bills.  J.  G.  Smith;  Lewis  W.  Chase;  Levy  & 
Garson. 

No.  119.  —  Discount  the  invoice  of  Granite  Mills,  dated  Aug.  15,  and  send  check,  for 
the  net  amount. 

No.  120.  —  Duplicate  charge  bill.     Gimbel  Bros. 

No.  121.  —A.  B.    Duplicate  cash  sales  bills.     E.  H.  Marcy  &  Co. ;  Wallace  Bros,  (check). 

No.  122.    ~  Pay  clerk  hire,  S75,  in  cash. 

No.  123.  ^  Pay  freight  bills  to  date,  per  agent's  request,  by  check,  S  27.45. 

September   17 
No.  124.  —  Check  W.  O.  Harrison  is  for  note  due  to  day. 
No.  125. —  Deposit  all  checks.     Collection,  S2. 

No.  126.  —  The  bank  informed  you,  at  time  of  making  above  deposit,  that  your  draft  of 
the  i2lh  inst.  on  Ingham  &  Case  has  been  returned  unpaid.     No  reason  assigned. 
Write  in  lead-pencil,  in  their  account  in  your  ledger,  Draft  returned,  9/17. 

Sei'tiimker   19 
No.  127.  — Invoice  from  Little  Falls  Woolen  Co. 
No.  128.  —  Pay  rent  for  September,  S300,  by  check. 

September  20 

No.  129.  — You  have  outstanding  an  interest-bearing  note,  due  to-day,  and,  as  you  have 
not  enough  funds  to  meet  it,  the  bank  has  agreed  to  renew  one-half  of  the  face  of  the  note 
for  10  days. 

Make  your  note  at  10  days  (with  interest),  in  favor  of  the  Commercial  Bank,  S5000. 
Receive  credit  for  the  face  of  the  note.  Enter  in  the  bill  book,  and  add  to  your  deposit  on 
stub  of  the  check  book. 

You  have  in  etTect  discounted  a  note  at  the  bank  and  received  credit  for  the  proceeds.  Therefore  you  have 
increased  your  bank  balance  that  amount. 


WHOLESALE   DRY   GOODS   BUSINESS  251 

No.  130.  —  Draw  a  check,  in  favor  of  the  Commercial  Bank,  in  full  for  the  old  note  as 
above  and  four  months'  interest.  This  is  your  first  "  renewal,"  and  you  should  study  the 
transaction  carefully. 

No.  131.  —  Check  from  W.  B.  Snow  to  apply  on  account. 

September  21 

No.  132.  —  Note  received  from  Lewis  W.  Chase  on  account. 

No.  133.  —  Discount  the  note  received  from  Lewis  W.  Chase  to-day,  and  receive  credit  for 
the  proceeds. 

No.  134.  —  A,  B,  C,  D.  Duplicate  charge  bills.  Jas.  H.  Wood  &  Son;  Thompson  & 
Bulkeley  ;    Sibley  &  Co.  ;    Brown  &  Wilson. 

September  22 
No.  135.  —  Check  received  from  J.  G.  Smith  is  on  account. 
No.  136.  —  Deposit  the  checks  on  hand.     Collection,  75^'. 

September  23 

No.  137.  —  'Sir.  Taylor  draws  cash,  $50,  for  private  use. 
No.  138.  —  Check  from  B.  C.  Wiley  to  apply  on  account. 
No.  139.  —  Invoice  from  Sibley,  Lindsay  &  Curr  Co. 
No.  140.  —  Invoice  from  Burke,  FitzSimons,  Hone  &  Co. 

September  24 
No.  141.  — Pay  grain  and  feed  bills  in  cash,  $  16.75. 

No.  142.  — Check  from  J.  G.  Smith  for  bill  of  14th  inst.,  less  6  ^/,   discount. 
No.  143. —  Pay   Burke,   FitzSimons,   Hone    &   Co.,   by   check,   for   invoice   of   Aug.    31, 
less  5  '/, . 

September  26 

No.  144.  —  Duplicate  charge  bill.     W.  B.  Snow  ;  terms,  2  '/('    10  ds.,  1  '/   30  ds. 

No.  145.  —  Send  Gimbel  Bros,  check  for  note  due  yesterday. 

When  notes  or  other  obligations  mature  on  Sunday,  it  is  customary  to  pay  them  the  following  day,  but  in 
the  states  where  days  of  grace  are  yet  allowed  they  are  payable  on  the  preceding  day. 

No.  146.  —  Check  from  Levy  &  Garson  in  payment  of  invoice  of  14th  inst.,  less  2  '"/(.. 

No.  147.  —  Duplicate  charge  bill.     Carlton,  Sons  &  Co. 

No.  148.  —  Check  from  Darius  D.  Miner  for  $5000.  This  money  has  been  raised  to 
meet  the  "renewal"  note  due  in  a  few  days  at  the  bank,  and  was  borrowed  on  the  firm's 
demand  note,  with  interest,  6  ''/, ,  secured  by  first  mortgage  on  the  flat  at  74  Center  St. 
Make  the  note,  and  the  proper  entries  for  the  transaction. 

Apparently  the  firm  has  issued  liabilities  of  double  the  value  of  the  asset  received.  Ijut  since  the  payment  of 
the  mortgage  is  conditional  on  the  non-payment  of  the  note,  the  lialiilities  have  actually  been  increased  by 
only  the  amount  of  the  increase  in  the  assets. 

Since  the  money  was  obtained  on  the  note  and  not  on  the  mortgage,  Mortgage  Payable  account  is  not,  of 
course,  charged  at  this  time. 

No.  149 Deposit  cash,  S200,  and  all  checks.     Collection  and  exchange,  $2. 


252  MODEIO;    ILLUSTli-VllVE   liUOKKEEPlNti 

September  28 
No.  150.  —  Pay  freight  bills  to  date  by  check,  S20.14. 
No    151.  —  Pay  cash  for  clerk  hire,  S70;  teamster,  S45. 
No.  152.  —  Pay  telephone  bill  by  check,  Si 5.     (Office  Expenses  %.) 

September  30 

No.  153.  —  Draw  cash  for  your  own  personal  use,  S40. 

No.  154.  —  Pay,  by  check,  note  and  interest  due  at  bank  to-day. 

No.  155.  —  Pay  II.  R.  Judson  his  salary  for  September  by  check,  S  150. 

No.  156.  —  Pay  rent  of  stable  for  September,  S50,  by  check  favor  of  P.  F.  Nolan. 

Make  proper  entry  for  salaries  due  the  partners. 

Construct  a  controlling  account  in  each  of  your  subsidiary  ledgers,  thereby  making  them 
self -balancing.     (See  Self-balancing  Ledgers,  page  223.) 

Complete  the  daily  posting  and  prove  the  cash.  Foot,  post  and  rule  off  all  books  of 
original  entry,  as  in  the  work  for  August.  Take  a  trial  balance  of  the  general  ledger  and 
of  each  of  the  subsidiary  ledgers,  and  see  if  the  subsidiary  ledgers  are  in  agreement  with 
the  controlling  accounts  in  the  general  ledger.  Use  loose  journal  paper  for  your  subsidiary 
trial  balances,  and  remember  to  include  only  the  current  balances. 

No.  156  a. —  .\ssuniing  that  the  checks  issued  Sept.  2S  and  30  are  outstanding,  make  a 
bank  voucher  slip,  balance  your  pass  book,  and  reconcile  your  bank  balance. 

Dissolution  of  Partnership.  —  It  has  been  apparent  to  your  partners  and  yourself  that  the 
present  conditions  in  the  trade,  and  the  outlook  for  increasing  the  business,  do  not  justify  a 
continuance  of  three  active  partners.  Therefore  it  has  been  decided  that  Mr.  Wood  will 
withdraw  from  active  management,  leaving  his  capital  in  the  business,  and  that  you  will 
retire  from  the  firm  on  Oct.  !,  to  engage  in  the  shoe  manufacturing  business. 

The  following  is  a  schedule  of  the  assets  and  liabilities  of  the  firm,  Sept.  30,  19 — ,  not 
shown  on  the  books. 

Inventories 

Merchandise,  per  schedule  No.  5, 
Furniture  and  Fi.xtures,  cost. 

Depreciation,  i  >  .  say, 
Horses  and  Wagons,  cost, 

Depreciation,  i  '/'c ,  say, 
Insurance,  cost. 

Earned, 
Shipping  Supplies,  per  schedule  No.  6, 
Office  Supplies,         "  "         No.  7, 

Real  Estate,  ajipraised  value, 
Wamsetta  Mills  stock,  market  value. 

Compute  the  interest  on  the  partners'  accounts. 

Prepare  a  Trading  and  Profit  and  Loss  statement  from  your  trial  balance  and  schedule 
of  inventories,  and  submit  it  to  your  teacher  for  approval.  Reserve  one-half  of  i  "^  of  the 
amount  of  the  gross  sales  for  September  for  bad  debts. 


322372.76 

►^3475. 

2^5. 

2450. 

752.50 

7.50 

735- 

267.50 

7.50 

260. 

9325 

106.50 

12250. 

II 50. 

WtiOLESALE   DRY   GOODS   BUSINESS  253 

Prepare  a  Balance  Sheet  and  submit  it  to  your  teacher  for  approval. 

Transfer  to  their  proper  accounts,  through  the  journal,  the  items  shown  in  the  Trading 
account  and  Profit  and  Loss  statement  and  the  inventory  items. 

Close  all  profit  and  loss  accounts  through  the  journal,  and  rule  off  the  accounts. 

Close  the  Profit  and  Loss  account  and  the  partners'  personal  accounts  through  the 
journal,  and  rule  off  the  accounts. 

Close  through  the  journal  the  Sundry  Inventories  account,  and  re-open  the  accounts 
which  it  controls.     Rule  off  the  Sundry  Inventories  account  and  the  Inventory  account. 

Close  the  partners'  capital  accounts  by  direct  entries,  and  bring  down  the  balances. 
Rule  off  the  accounts. 

Take  off  a  post-closing  trial  balance,  and  submit  it  to  your  teacher,  together  with  your 
books  and  vouchers,  for  approval. 

EXERCISES 

1.  Rule  a  half  sheet  of  paper  to  represent  two  pages  of  a  general  ledger,  and  construct 
a  Trading  account  on  one  of  the  pages,  and  a  Profit  and  Loss  account  on  the  other.  Transfer 
from  their  respective  accounts  in  your  ledger  to  the  Trading  account  such  items  as  will  cause 
that  account  to  show  in  detail  the  trading  results  for  August.  Close  out  the  account,  and 
transfer  the  gross  trading  profit  to  the  Profit  and  Loss  account  by  direct  entries. 

2.  Transfer  from  their  respective  accounts  in  your  ledger  to  the  Profit  and  Loss  account 
such  items  as  will  cause  that  account  to  show  in  detail  the  profits  and  losses  for  August. 
Close  out  the  account  by  direct  entry  for  the  amount  of  the  net  gain. 

3.  Make  such  direct  entries  in  the  Trading  account  from  your  ledger  as  will  cause  the 
account  to  show  the  trading  results  in  detail  for  September.  Close  out  the  account,  and 
transfer  the  gross  trading  profit  to  the  Profit  and  Loss  account. 

4.  Make  such  direct  entries  in  the  Profit  and  Loss  account  from  your  ledger  as  will  cause 
that  account  to  show,  first,  the  net  trading  profits  for  September,  and  second,  the  division 
of  the  net  gain  for  the  month.  This  will  require  two  closings  of  the  Profit  and  Loss  account 
for  the  month. 

5.  State  which  of  the  two  methods  of  treating  the  Trading  account  and  the  Profit  and 
Loss  account,  as  illustrated  in  the  Dry  Goods  business  and  in  the  above  exercises,  you  think 
is  the  better,  and  give  the  reasons  for  your  opinion. 

6.  Rule  one  side  of  a  half  sheet  of  cap  paper  to  represent  a  page  of  a  general  ledger, 
and  construct  a  Merchandise  account.  From  their  respective  accounts  in  your  ledger, 
transfer  by  direct  entries  such  items  as  will  cause  the  account  to  show  the  merchandising 
results  for  August.  Balance  and  rule  off  the  account,  transfer  the  gain,  and  bring  down 
the  current  inventory.  Next  cause  the  account  to  show  the  merchandising  results  for 
September.     Balance  and  rule  off  the  account  the  same  as  for  August. 

7.  The  check  book  of  the  Bigelow  Dry  Goods  Company  on  October  31  showed  an  over- 
draft of  S53-92,  and  the  bank  pass  book  when  written  up  as  of  that  date  showed  a  credit  bal- 
ance of  S416.27.  The  deposits  and  collections  for  November  amounted  to  Si  375 1.84,  and  the 
checks  issued  amounted  to  S 8527.39.  When  the  pass  book  was  written  up  for  November, 
it  showed  a  credit  balance  of  $6532.28.  The  checks  outstanding  were:  #389,  $156.82; 
4^412,  $  1309.02;  #415,  $87.12.  Rule  a  form  of  check  book  stub,  and  show  how  you  would 
reconcile  the  bank  balances  on  October  31  and  November  30,  using  the  above  figures. 

8.  Prepare  a  Cash  Differences  slip  (see  Cash  Differences  on  page  220),  and  make  the 


•254  MODERN    ILLUSTRATIVE   BOOKKEErLXG 

necessary  records  on  it  for  the  following  "outs"  which  you  will  assume  occurred  in  your 
cash  book  for  February:  i,  over,  S2.ig.  2,  over,  S2.19.  3,  over,  S2.19.  4,  short,  $2.81. 
6,  short,  S2.Sr.  7,  O.  K.  21,  short,  $3.65.  22,  short,  §3.65.  23,  O.  K.  24,  short, 
S  1.25.  25,  short,  S  1.25.  27,  short,  S  1.25.  28,  over,  $8.75.  Rule  a  journal  form  and  frame 
an  entry  for  the  monthly  cash  difference. 

9.  Your  bank  has  notified  you  that  the  check  of  J.  T.  Carpenter,  in  your  deposit  of 
February  28,  contains  a  discrepancy  of  S  10  between  the  amounts  as  expressed  in  words  and 
in  figures.  You  find  upon  investigation  that  Carpenter  was  credited  from  his  letter,  which 
accompanied  the  remittance,  for  S  132.75,  the  amount  as  expressed  in  words,  and  that  the 
check  was  included  in  the  deposit  for  the  amount  Si 22.75,  as  expressed  in  figures.  Frame 
proper  entries  to  adjust  Carpenter's  account,  the  Cash  Differences  account,  and  the  bank 
account. 

10.  Assume  that  you  have  been  keeping  a  General  Expense  account  for  all  expenses, 
except  selling  expenses,  and  that  you  have  a  General  Expense  column  in  your  cash  book. 
You  are  instructed  to  submit  an  analysis  of  the  General  Expense  account,  to  be  used  in 
making  up  a  semiannual  Trading  and  Profit  and  Loss  Statement,  and  are  informed  that  the 
subdivision  of  the  General  Expense  account  is  to  be  as  follows :  Office  Supplies,  Oflfice 
Ex])enses,  Office  Salaries,  Shipping  Supplies,  Shipping  Expenses,  Deliver}'  Expenses,  Rent, 
Miscellaneous  Expenses. 

Prepare  an  analysis  sheet  by  ruling  as  many  money  columns  on  a  sheet  of  cap  paper  as 
you  have  subdivisions  of  the  account  to  be  analyzed,  and  head  each  column  with  the  name 
of  a  subdivision. 

Assume  that  your  cash  book  shows  the  following  general  expense  entries  for  the  period  : 
Bo.xes,  S  14.25,  S  17.10,  S  13.05,  S  24.60.  Automobile  repairs,  S3.75,  $7-50,  S  18.  Store  rent, 
$200,  S200,  S200,  S200,  S200,  S200.  Gasoline,  S3. 60,  $4- 50,  Si. 80,  $9.  Stationery,  S  12.50, 
S26.30,  S3.85,  S  14-60.  Office  salaries,  S750,  S750,  S675,  S725,  S87S,  S775.  Shipping  De- 
partment salaries,  S325,  S325,  S450,  S425.75,  S375,  S410.  Typewriters,  Sioo,  S162.50. 
Nails  and  bands,  S3. 25,  S6.15,  S8.50.  Garage  rent,  S25,  S25,  S30,  S30,  S25,  S25.  Postage, 
S5,  S3. 75,  S5,  Sio.  Telephone,  Sio,  S  10.75,  Si  1.25,  S  10,  S  13.25,  S10.85.  Typewriter  re- 
pairs, S1.75,  S2,  Si.25.  Typewriter  ribbons,  S4.80,  S2.50.  Wages,  chauffeur  and  helper, 
5  100,  S95,  Sioo,  S105,  Sioo,  S90.  Taxes,  Sii3-75-  Insurance,  S68.75.  Pens,  pencils, 
etc..  Si- 10,  S.75,  S2.25.  Telegrams,  S.40,  S.25,  S.72,  S.45.  S.30,  S.25,  S.60,  S.93-  Elec- 
tric light,  S4-25,  S4,  S3.75,  S3. 60,  S3-25,  S2.75.  Roll-top  desk  and  chair,  S85.  Rubber 
tires,  S70,  S36.  Extra  trucking,  S3. 75,  S4-25,  S2.50,  S7.2S.  Wrapping  paper  and  twine, 
$  14.25,  S  1.85,  S3.60. 

Carry  the  above  items  to  the  proper  columns  on  the  analysis  sheet,  total  the  column.-;, 
and  make  the  required  analysis  on  a  separate  sheet. 

1 1.  Goodwin  &  Mackey  had  merchandise  on  hand  July  i,  19 — ,  inventoried  at  S  12209.2C. 
They  dissolved  partnership  August  31  of  the  same  year.  Their  net  purchases,  including 
freight,  during  July  and  August  were  S6928.34,  and  their  net  sales,  S  I3775-50.  Their  stock 
on  hand  August  31  was  inventoried  at  S6353.50.  Prepare  a  Trading  Account  section  of  5 
Trading  and  Profit  and  Loss  Statement,  and  show  the  gross  profit  on  trading,  and  the 
percentage  of  gross  profit  on  the  turnover. 

12.  The  merchandise  inventory  schedules  of  James  Sheffield  &  Company  on  June  30, 
ig — ,  were  as  follows  :  l-"urnishing  Goods,  S  1458.50;  Gloves  and  Mittens,  S  1S04. 50;  Knit 
Goods,  S  1990.75.  Their  net  purchases  during  the  period  were:  Furnishing  Goods,  S  1391.25  ; 
Gloves  and  Mittens,  51600.50;   Knit  Goods,  S3987.25.     Their  net  sales  were:  Furnishing 


■WHOLESALE    DRY   GOUDS    IJfSLXESS  255 

Goods,  S3303.60;  Gloves  and  Mittens,  S3919.60;  Knit  Goods,  S6555. 25.  Their  stock  on 
hand  at  the  beginning  of  the  period  was  as  follows  :  Furnishing  Goods,  S  2500.90;  Gloves  and 
Mittens,  S 2600. 50.  Knit  Goods,  53500.50.  Construct  separate  accounts  for  each  depart- 
ment, and  show  the  gross  profit  on  trading,  and  percentage  of  profit  on  each  class  of  goods. 

13.  Using  the  data  in  No.  12,  prepare  a  Trading  account  section  of  a  Trading  and  Profit 
and  Loss  Statement,  and  show  the  gross  trading  profit  and  the  percentage  of  the  profit  of 
each  department,  the  total  gross  trading  profit,  and  the  percentage  of  total  gross  profit  on 
the  total  turnover. 

14.  From  the  data  given  on  the  Profit  and  Loss  section  of  your  Trading  and  Profit  and 
Loss  Statement  for  September,  prepare  a  Profit  and  Loss  section  which  will  show  the  selling 
e.xpenses,  and  the  percentage  of  cost  for  selling,  based  on  the  turnover;  the  actual  general 
and  administrative  e.xpenses,  and  the  percentage  of  cost  for  conducting  and  administering 
the  business  based  on  the  turnover.  In  doing  this  work  distinguish  between  allowances  and 
expenditures.     Complete  the  Profit  and  Loss  section. 

15.  The  assets  and  liabilities  of  D.  F.  Beattey  &  Co.  for  the  period  ending  December  31, 
19 — ,  were  as  follows  :  Assets  —  Cash  on  hand,  $43.29  ;  In  bank,  $  6790.24  ;  Notes  Receiv- 
able, S9909.76;  Accounts  Receivable,  $8552.76;  Real  Estate,  $6000;  Merchandise,  S6713.30; 
P'urniture  and  Fixtures,  S  1789.48.  Liabilities  —  Accounts  Payable,  S  1736.16;  Notes  Pay- 
able, S2000.  The  partners'  accounts  were  as  follows:  D.  F.  Beattey,  Capital,  S 20000; 
Personal  (Debit  balance),  S480.  E.  H.  Sprague,  Capital,  $  15000;  Personal  (Debit  balance), 
S433.67.  The  open  nominal  accounts  were:  Debits  —  Discounts  on  sales,  S302. 57  ;  Interest, 
$21.34;  Agents'  Salaries  and  Expenses,  $764.12;  Office  Salaries  and  Expenses,  $564.80. 
The  net  purchases  were  $8514.27,  and  the  net  sales,  $13009.57.  The  merchandise  on  hand 
at  the  beginning  of  the  period  was  inventoried  at  $7362.91  ;  real  estate  at  $6180;  and  furni- 
ture and  fixtures  at  $1826.  P'rom  the  above  data  make  a  Trial  Balance,  a  Trading  and 
Profit  and  Loss  Statement,  and  a  Balance  Sheet. 

The  following  exercises  are  given  for  use  in  schools  which  have  adding  machines: 

16.  Prove  the  charge  postings  to  your  sales  ledger  for  August,  by  listing,  first,  the  charge 
sales  from  your  sales  book,  and  second,  the  charge  entries  in  the  ledger,  and  comparing  the 
totals  of  the  two  lists. 

17.  Prove  the  credit  postings  to  your  sales  ledger  by  listing,  first,  the  credit  payments  by 
customers  from  the  cash  book  and  journal,  and  the  return  sales  ;  and  second,  the  credit 
entries  in  the  ledger,  and  comparing  the  totals  of  the  two  lists.  Compare  the  difference 
between  the  above  charge  entries  list  and  the  credit  entries  list,  with  the  balance  of  Accounts 
Receivable  accounts  as  shown  in  your  balance  sheet  for  August. 

18.  Prove  the  credit  postings  to  your  purchase  ledger  for  September  by  listing,  first,  the 
invoices  in  your  invoice  book;  and  second,  the  credit  entries  in  the  accounts,  and  comparing 
the  totals  of  the  two  lists. 

19.  Prove  the  debit  postings  to  your  purcha.se  ledger  by  listing,  first,  the  payments  to 
creditors  from  your  cash  book  and  journal,  and  the  return  purchases  ;  and  second,  the  debit 
entries  in  the  accounts,  and  comparing  the  totals  of  the  two  lists.  Compare  the  difference 
between  the  above  credit  entries  list  and  the  debit  entries  list,  with  the  balance  of  the 
Accounts  Payable  account,  as  shown  by  your  balance  sheet  for  September. 

20.  Prove  your  bank  balance  for  September  as  shown  by  your  check  book  by  listing,  first, 
your  deposits  and  collections  from  your  check  book  stub,  and  second,  the  checks,  from  the 
vouchers,  and  comparing  the  difference  between  the  totals  of  the  two  lists  with  the  balance 
shown  in  the  check  book. 


256  MODERN   ILI.USrUATIVE   BOOKKEEPING 

QUESTIONS 

1.  What  is  wholesaling  ? 

2.  From  what  do  wholesalers  chiefly  obtain  their  revenue  ? 

3.  What  is  the  principal  revenue  account  of  a  mercantile  business  ? 

4.  What  is  meant  by  "trading"  ?     By  "turnover"  ? 

5.  Describe  the  form  of  journal  used  in  the  Wholesale  Dry  Goods  business,  and  exj.lain  the  posting. 

6.  Describe  the  cash  book,  and  explain  the  posting. 

7.  How  may  the  cash  be  proved  at  any  time,  when  this  form  of  cash  book  is  used  .'' 

8.  What  are  ''cash  differences''  ?     Explain  how  they  are  treated  and  adjusted. 

9.  What  is  a  purcliase  journal  ?     A  sales  journal  ? 

10.  Explain  how  the  posting  is  done  from  these  two  books.     Explain  the  bill  and  charge  system. 

11.  Describe  the  auxiliary  ledgers  used  in  this  work. 

12.  How  may  accounts  with  customers  be  divided  when  sectional  sales  ledgers  are  used  ? 

13.  What  is  a  private  ledger  ? 

14.  What  controlling  accounts  did  you  construct  in  this  work  ? 

15.  Upon  what  does  the  accounts  to  be  kept  in  any  business  usually  depend  ?     What  determines  the  special 
accounts  to  be  kept  ? 

16.  What  is  the  principal  deduction  from  revenue  in  a  mercantile  business  ?     How  may  the  account  which 
it  represents  be  divided  ? 

17.  Explain  "analyzing  an  account." 

1 8.  How  are  accounts  usually  divided  ?     Explain  each  division. 

19.  Detine  assets  and  liabilities.     Explain  fixed  assets  :  floating  assets ;  fixed  liabilities  ;  floating  liabilities. 

20.  When  a  legal  change  takes  place  in  the  ownership  of  individual  or  partnership  business,  what  is  the 
effect,  and  what  must  be  done  ? 

21.  Is  it  necessary  to  open  a  new  set  of  books  when  such  a  change  takes  place  ? 

22.  How  would  a  new  set  of  books  be  opened  ? 

23.  What  are  supporting  records  ? 

24.  What  is  a  shipper's  order  ?     Explain  the  difference  between  this  and  a  C.  O.  D.  express  shipment. 

25.  What  are  return  books  ?     Explain  how  returns  are  treated  in  this  work. 

26.  What  are  the  diflercnt  classes  of  expenses  .'     Explain  each. 

27.  When  are  merchandise  inventories  usually  taken  ?     For  what  purposes  ?     At  what  price  ? 

28.  How  can  the  true  profits  of  any  business  period  be  determined  ? 

29.  What  is  a  "  trading  and  profit  and  loss  statement "  ?     Expl.ain  each  section  in  detail. 

30.  What  is  the  difference  between  the  terms  ■'  gross  profit  on  trading  "  and  "  net  profit  on  trading  "  ? 

31.  What  are  reserves  ?     Explain  "depreciation." 

32.  What  is  a  balance  sheet  ? 

33.  How  are  the  assets  and  liabilities  usually  arranged  on  a  balance  sheet  in  a  mercantile  business  ? 

34.  What  is  the  principal  difference  between  a  profit  and  loss  statement  and  a  balance  sheet  ? 

35.  What  are  "quick  assets'"  ?     Give  some  e.xamples. 

36.  How  is  the  general  ledger  closed  in  this  work,  and  in  accordance  with  what  accounting  axiom  ? 

37.  Why  are  not  the  partners'  capital  accounts  closed  by  passing  the  entries  through  the  journal,  instead  of 
by  making  direct  entries  ? 

38.  What  purpose  does  the  Sundry  Inventories  account  serve  ? 

39.  What  is  a  post-closing  trial  balance  ? 

40.  What  new  features  of  bookkeeping  and  accounting  have  you  learned  in  this  work  ? 


CORPORATIONS 

A  Corporation  is  an  artificial  body  created  by  law  for  certain  purposes,  which  are  stated 
in  its  charter,  or  articles  of  incorporation.  It  is  composed  of  indi\'iduals,  and  differs  from  a 
partnership  chiefly  in  that  it  is  limited  in  its  activities  to  the  specific  purposes  for  which  it 
was  created  ;  that  it  has  a  capacity  of  perpetual  succession  ;  and  that  the  members  which 
compose  it  are  not  liable  for  the  debts  of  the  corporation,  excepting  in  certain  cases,  and  then 
only  for  a  limited  sum. 

Corporations  are  divided  into  two  general  classes  ;  namely  :  public  corporations,  which  are 
created  for  the  purposes  of  government  and  the  management  of  jniblic  affairs  ;  and  private 
corporations,  which  are  created  for  private  purposes,  and  the  management  of  private  affairs 
in  which  the  members  are  interested.  Some  private  corporations  are  engaged  in  enter- 
prises which  are  of  a  public  nature,  but  which  are  conducted  and  managed  for  private  pur- 
poses or  private  gain.  Some  of  these  corporations,  such  as  railroad,  gas,  water,  telegraph, 
telephone,  and  street  car  or  traction  companies,  etc.,  are  called  "  public  service  corporations." 
Banks,  trust  companies,  and  insurance  companies  are  called  "  financial  corporations,"  and 
those  engaged  in  manufacturing  or  trading  are  called  "  business  corporations."  Only 
business  corporations  will  be  treated  in  this  work. 

Business  Corporations. — Until  comparatively  recent  times,  most  of  the  manufacturing 
and  trading  done  in  this  country  was  conducted  under  two  forms  of  management ;  namely, 
the  single  proprietorship  form,  and  the  partnershijo  form.  Each  of  these  forms  possesses 
certain  advantages  and  disadvantages  as  compared  with  the  ccrporate  lorm.  Among  the  ad- 
vantages are  :  the  ease  with  which  they  may  be  established,  the  freedom  of  action  allowed,  and 
the  benefit  to  the  business  from  the  active,  personal  efforts  of  the  ])roprietor  or  partners.  The 
disadvantages  are  :  the  usual  inability  of  a  single  proprietor  or  of  several  partners  to  command 
the  necessary  capital  to  conduct  a  large  enterprise;  liability  of  the  individual  owner  or  of 
each  member  of  a  firm,  for  all  the  debts  of  the  concern  ;  and  the  dissolution  of  the  partner- 
ship, and  the  possible  discontinuance  of  the  business,  upon  the  withdrawal  or  death  of  a 
partner. 

For  the  development  of  great  natural  resources,  and  for  the  distribution  of  both  natural  and  manufactured 
products  to  meet  great  demand,  large  capital  and  organized  effort  are  required,  and  these  are  usually  best  ob- 
tained by  the  corporate  form  of  business.  During  recent  years  the  corporate  form  has  made  great  strides  in 
this  country,  until  now  it  dominates  most  of  the  important  lines  of  business,  such  as  mining,  manufacturing, 
merchandising,  or  trading,  as  well  as  transportation  and  other  public  service  activities. 

Holding  Companies.  —  A  corporation  which  is  formed  for  the  purpose  of  controlling 
other  corporations  is  called  a  "  holding  company  "  ;  corporations  so  controlled  are  called 
"subsidiary  companies."  The  larger  part  of  the  stock  of  each  subsidiary  company,  or  in 
some  cases  all  of  it,  is  transferred  to  and  owned  by  the  holding  company,  which  issues  its 
own  stock  in  exchange.  The  subsidiary  companies  retain  their  corporate  identities,  and  de- 
clare dividends  like  other  corporations.  The  holding  company  may  thus  have  a  large 
incom-i,  which  is  distributed  in  dividends  to  its  stockholders. 

207 


2o8  MODERN    II.LLSTKAilVi;   UOOKKEEPING 

Subsidiary  companies  are  operating  concerns  ;  tlie  holding  company  is  usually  an  executive  concern. 
Some  of  the  larger  corporations  partake  of  the  nature  of  holding  companies,  as  they  both  control  other  cor- 
porations, and  operate  .separate  plants  or  systems.  Holding  companies  are  monopolistic  in  nature,  and  their 
creation  and  conduct  are  closely  regulated  by  law. 

Trusts.  —  A  combination  of  business  corporations  formed  for  the  purpose  of  controlling 
the  output,  and  maintaining  a  monopoly  of  any  product  or  products,  and  fi.xing  the  prices 
of  the  same,  is  called  a  "  trust."  Somt;  business  corporations,  owing  to  their  practically  un- 
limited capital,  enormous  output,  wide  activities,  and  their  control  of  a  large  part  of 
the   kinds   of  products  which  they  handle,  arc  commonly  called  trusts. 

Corporations  :  How  Created.  —  Formerly  corporations  were  created  by  special  acts  of 
the  legislatures,  but  the  statutes  of  all  of  the  states  now  provide  other  methods  for  the 
formation  of  corporations. 

Government  Supervision. — Corporations,  being  creatures  of  government,  are  subject  to 
the  sujiervision  of  the  power  which  created  them.  The  supervision  is  expressed  in  their 
charters,  and  in  various  acts  of  the  legislatures,  and  is  exercised  by  special  governmental 
bodies,  such  as  Railroad  Commissions,  Public  Service  Commissions,  etc.  Corporations 
which  do  an  interstate  transportation  business  are  subject  to  the  supervision  of  the  national 
government,  and  this  supervision  is  exercised  by  the  Interstate  Commerce  Commission. 

The  e.\tent  of  the  .supervision  of  corporations  ditTers  in  the  various  states.  In  some  states,  it  is  compara- 
tively slight  .  while  in  others  it  amounts  to  the  control  of  such  important  matters  as  issuance  of  stocks  and 
bonds,  method  of  accounting,  forms  of  reports  or  statements,  rates  for  service.s.  and  in  some  instances,  ma.\i- 
mum  or  specific  prices  of  products.  The  Interstate  Commerce  Commission  has  power  to  control  the  rates  of 
railroads  which  do  an  interstate  liusinc.ss. 

Corporations  :  How  Formed.  —  Corporations  are  formed  in  accordance  with  the  require- 
ments of  the  statutes  concerning  corporations,  and  these  differ  more  or  less  in  the  various 
states.  A  corporation  may  be  formed  in  the  state  in  which  it  is  domiciled,  that  is,  in  which 
it  has  its  main  office,  or  it  may  be  formed,  unless  the  statutes  restrict,  under  the  laws  of 
any  other  state.  A  corporation  formed  in  the  state  in  which  it  is  domiciled  is  called  in  that 
state,  a  "domestic  corporation,"  and  in  all  other  states,  a  "foreign  corporation." 

The  statutes  of  the  various  states  specify  how  many  persons  are  required  to  organize 
a  corporation.  In  mo?''  states,  at  least  three  persons  of  full  age  must  unite  to  form  a  cor- 
poration ;  in  some  states,  five  or  more  are  required ;  and  in  at  least  one  state,  any  number 
may  so  unite.  These  persons  meet  and  make  a  certificate  of  incorporation  which  usually 
contains:  the  name  of  the  projiosed  corporation;  purpose  or  purposes  for  which  it  is 
formed,  and  location  of  its  principal  business  office ;  amount  of  capital  stock,  kinds  ot  stock, 
and  number  and  par  value  of  its  shares:  duration  of  incorporation  ;  number  of  directors; 
and  such  other  information  as  the  statutes  may  require. 

Puljlic  corporations,  and  some  private  corporations,  as  hospitals,  colleges,  etc.,  do  not  issue  stock,  and  are 
called  •■  non-stock  corporations." 

After  the  certificate  of  incorporation  has  been  signed  by  the  incorporators,  and  acknowl- 
edged before  a  notary  public  or  some  similar  officer,  it  is  then  submitted  to  a  projier  state 
officer,  usually  the  Secretary  of  State,  who,  if  he  accepts  it,  indorses  it  to  that  effect  and 
returns  it  to  the  incorjjorators. 

When  the  incorporation  fees  and  the  annual  tax  have  been  ])aid,  the  certificate,  accom- 
panied by  the  State  Treasurer's  receipt,  is  then  filed  in  the  office  of  the  County  Clerk  (or 
other  recording  officer)  of  the  county  in  which  the  ]>rincipal  business  office  of  the  company 
is  to  be  located.     Some  states  require  that  the  certificate  of  incorporation  shall  be  filed  in  all 


CORPORATIONS  259 

the  counties  of  the  state  in  which  the  corporation  intends  to  do  business.  Foreign  corpora- 
tions are  required  to  file  a  certificate  of  designation  with  the  secretary  of  state. 

After  the  certificate  of  incorporation  has  been  filed,  subscription  books  are  opened  and 
the  capital  stock  is  disposed  of  by  subscription  or  otherwise.  If  the  corporation  is  to  be 
formed  to  take  over  a  going  business,  the  subscription  list  is  usually  dispensed  with,  the 
former  subscriptions  of  the  incorporators  taking  its  place. 

A  certain  amount  must  be  subscribed  for  and  paid  before  the  corporation  is  permitted  to 
begin  business.  After  such  stock  has  been  subscribed  for,  and  such  payment  has  been 
made  as  required  by  the  statutes  or  stated  in  the  certificate,  a  meeting  of  the  stockholders 
is  called,  at  which  the  officers  are  elected  and  by-laws  are  adopted.  The  record  of  these 
proceedings  is  filed  with  the  Secretary  of  State,  and  a  certificate  is  issued  by  him  to  the  effect 
that  the  corporation  is  fully  organized  and  authorized  to  do  business  under  the  laws  of  the 
state.  In  a  few  states,  the  statutes  require  that  the  meeting  of  the  incorporators  and  the 
arranging  of  the  organization  must  take  place  before  the  application  for  the  charter  is  filed. 

Kinds  of  Stock. — The  capital  stock  of  a  corporation  is  divided  into  shares,  each  share 
repiesenting  a  proportionate  part  of  the  authorized  capital.  In  this  country  the  shares  of  a 
business  corporation  are  usually  of  two  kinds,  called  "preferred  stock"  and  "common 
stock."  Preferred  stock  is  stock  to  which  some  preference  has  been  given,  such  as  regards 
the  payment  of  dividends,  or  the  assets  in  case  of  liquidation,  over  other  stock  issued  by  that 
corporation.  There  may  be  more  than  one  kind  of  preferred  stock,  such  as  first  preferred, 
second  preferred,  etc.  The  dividends  payable  on  preferred  stock  are  usually  limited  in 
amount;  they  may  be  either  cumulative  or  non-cumulative.  If  cumulative,  the  stated  divi- 
dends attach  to  tlie  stock  each  year  whether  or  not  they  are  earned,  and  all  arrearages  of 
such  ]3referred  dividends  must  be  paid  before  the  common  stock  receives  any  dividend. 
Non-cumulative  dividends  do  not  attach  to  the  stock  during  any  period  when  they  are  not 
earned. 

Common  stock  is  the  ordinary  stock  of  a  corporation,  with  neither  special  privileges  nor 
restrictions.  When  all  the  stock  is  on  the  same  equality  as  to  voting,  dividends,  and  par- 
ticipation in  assets,  it  is  common  stock. 

When  there  is  more  than  one  i.ssue  of  stock,  it  is  customary  to  keep  separate  accounts  for  each  issue,  as  Pre- 
ferred Stock,  First  Preferred  Stock,  Second  Preferred  Stock,  Common  Stock,  etc. 

The  amount  of  sti)ck  authorized  as  specified  in  the  charter  is  called  the  "  capital  stock  of 
the  corporation."  The  amount  of  stock  subscribed,  paid  for,  or  issued  is  the  "paid-up  capi- 
tal," also  called  the  "outstanding  stock."  Stock  which  has  been  issued  and  has  afterwards 
been  purchased  bv,  or  donated  to,  the  corporation  is  called  "treasury  stock."  Stock  which 
has  not  been  subscribed  for  and  not  issued  is  sometimes  called  treasury  stock,  but  since  such 
stock  has  no  existence,  it  can  have  no  value,  and  therefore  should  not  be  treated  as  an  asset. 
.Such  stock  is  called  "unissued  stock." 

Stock  Certificates.  —  The  shares  of  stock  in  a  corporation  are  issued  in  the  form  of  cer- 
tificates, each  of  which  states  the  kind  of  stock,  par  value,  and  the  number  of  shares  which 
the  certificate  represents.  Stock  certificates  are  transferable  by  assignment,  either  wholly 
or  in  part,  at  will,  but  such  transfer  is  not  complete  until  the  proper  record  has  been  made 
on  the  books  of  the  corporation. 

Bonds.  —  A  bond  is  an  obligation,  and  is  in  effect  a  ]iromise  to  pay  a  certain  sum  and 
interest  on  the  same  ;  the  amount  of  the  sum,  the  date  of  payment,  the  rate  of  the  interest  and 
when  payable,  being  specified  in  the  bond.      It  is  one  of  the  functions  of  corporations  to 


260  MODEKN    ILLfSTRATIVE   BOOKKKEriNG 

issue  bonds,  and  the  bonds  of  business  corporations  are  usually  issued  against  tangible  assets. 
To  secure  payment  of  these  bonds,  the  corporation  is  required  by  statute  to  execute  a  mort- 
gage, or  some  other  form  of  lien  on  its  property,  to  some  trustee  or  trustees,  to  be  held  as 
security  for  the  payment  of  the  bond  at  maturity,  and  of  the  interest  as  it  falls  due. 

Bonds  are  issued  for  the  purpose  of  raising  funds  for  the  use  of  the  corporate  business, 
and  in  accordance  with  the  provisions  of  the  statutes,  and  with  the  consent  of  the  stock- 
holders. 

Forms  of  Bonds. — There  are  two  general  forms  of  bonds;  namely,  coupon  bonds  and 
registered  bonds.  Coupon  bonds  are  usually  payable  to  bearer,  and  have  interest  coupons 
attached  which  arc  also  payable  to  bearer,  and  which  are  promises  to  pay  the  amount  of 
interest  due  at  each  interest  period,  as  specified  in  the  bond.  Registered  bonds  are  bonds 
which  are  issued  in  the  names  of  particular  persons,  and  are  transferable  only  on  the  books 
of  the  corporation.  Interest  on  registered  bonds  is  paid  only  to  persons  in  whose  names 
the  bonds  appear  on  the  books  of  the  corporation,  or  to  their  assignees.  Some  coupon 
bonds  are  registered  as  to  the  princi])al  of  the  bond,  the  coupons  being  payable  to  bearer. 

Kinds  of  Bonds.  —  Bonds  are  of  various  kinds,  and  are  usually  designated  by  the  nature 
of  the  lien  by  which  they  are  secured,  or  by  the  more  important  or  distinctive  feature  of  the 
issue,  such  as  mortgage  bonds,  equipment  bonds,  sinking  fund  bonds,  income  bonds,  con- 
vertible bonds,  debenture  bonds,  etc. 

From  a  bookkeeping  .standpoint,  bonds  are  treated  the  same  as  are  notes  payable  or  mortgages  payable,  a 
general  Bond  account  or  separate  accounts  for  each  kind  being  constructed. 

Sinking  Fund. — A  fund  created  out  of  net  earnings  and  set  aside  for  the  purpose  of 
paying  off  a  ti.xed  obligation  at  maturity  is  called  a  "  sinking  fund."  The  money  so  set 
aside  is  taken  out  of  the  business  and  either  deposited  with  a  trustee  or  invested  in  market- 
able interest-bearing  .securities.  .Such  money  is  called  "invested  capital"  to  designate  it 
from  "working  capital,"  or  the  capital  actively  used  in  the  business.  A  sinking  fund  is  an 
asset  to  tlie  business. 

For  commercial  purposes  the  usual  way  of  providing  a  sinking  fund  sufficient  to  pay  off  a  bonded  indebted- 
ness is  to  set  aside  each  year  from  earnings  eitlicr  a  proportionate  part  of  the  amount  of  tlie  debt  tor  tlie  number 
of  years  the  bonds  have  to  run.  or  such  a  sum  as  will,  with  accumulated  interest,  am  nmt  in  the  given  number  of 
years  to  the  amount  of  the  bonds. 

In  l)oth  cases,  the  sum  .set  aside  each  year  would  be  immediately  invested.  The  rate  of  interest  on  the  invest- 
ments in  the  second  case  would  be  that  necessary  to  accomplish  the  purpose  of  the  fund,  and  the  interest  would 
be  credited  to  -Sinking  Fund  account.  The  interest  on  the  investtnent  in  the  first  case  would  be  credited  to  a 
revenue  account,  and  the  interest  on  the  bonds  charged  to  a  revenue  expense  account. 

Dividends.  —  The  profits  and  losses  of  a  corporation  are  found  through  the  trading  and 
profit  and  loss  accounts,  the  same  as  in  any  other  business,  and  the  net  profits  are  carried 
to  the  Surplus  account.  The  division  of  profits  among  stockholders  is  made  by  means  of 
dividends,  which  are  declared  at  fixed  percentages,  such  as  i^'/r ,  3'/o  6"^/,  etc.,  on  the  out- 
standing stock.  Dividends  are  payable  only  to  stockholders  of  record  at  the  time  the  stock 
books  are  closed,  or  at  sijecified  dates,  excepting  in  cases  of  a  few  stocks  which  have  coupons 
attached  to  the  certificates,  when  the  dividends  are  paid  on  presentation  of  the  coupons. 

Separate  accounts  are  usually  kept  for  different  cla.sses  of  dividends,  when  there  is  more  than  one  kind  of 
stock,  as  Preferred  Dividend  account,  Common  Dividend  account,  etc. 

Surplus.  —  The  term  "surplus"  usually  applies  to  a  portion  of  the  profits  withheld  from 
distribution,  either  for  the  purpose  of  establishing  a  permanent  addition  to  the  capital  of 


CORPORATIONS  2(Jl 

the  corporation,  or  for  such  other  purposes  as  the  board  of  directors  may  designate.  In 
practice,  as  above  stated,  the  net  profits  are  carried  to  Surphis  account,  and  after  the  divi- 
dends have  been  charged  to  it,  the  balance  is  the  actual  surplus  for  the  period.  The  sur- 
plus frequently  serves  to  enable  business  corporations  to  maintain  their  ilividends  at  regular 
rates  during  periods  of  depression. 

Directors.  — The  affairs  of  a  corporation  are  managed  by  a  board  of  directors.  In  a  few 
states,  the  directors  for  the  first  year  are  named  in  the  certificate  of  incor]joration.  In  other 
states  they  are  elected  by  the  stockholders  at  their  first  meeting.  The  number  of  directors 
of  a  corporation  is  either  specified  in  the  charter  application  or  is  fi.xed  by  the  by-laws.  The 
minimum  number  allowed  by  law  is  usually  three. 

In  the  larger  corporations,  where  the  board  of  directors  is  generally  composed  of  a  con- 
siderable number  of  members,  the  powers  of  the  board  are  given  during  the  interim  between 
board  meetings,  to  an  executive  committee,  which  must  be  composed  of  members  of  the 
board,  and  that  committee  becomes  the  real  managing  body  of  the  cor])oration.  In  addition 
to  an  executive  committee,  a  finance  committee  is  often  appointed  to  supervise  the  financial 
affairs  of  the  company. 

Officers.  —  The  officers  of  a  corporation  are  usually  president,  secretary,  and  treasurer, 
who  are  elected  by  the  board  of  directors.  There  may  be  one  or  more  vice-presidents,  and 
other  similar  officers,  and  sometimes  two  offices  may  be  held  by  one  person. 

The  President. —  In  most  corporations  the  president  is  the  chief  executive  officer.  In 
the  \-ery  large  corporations,  some  of  the  duties  usually  performed  by  the  president  are 
assumed  by  the  chairman  of  the  board  of  directors.  Generally  the  president  presides  over 
the  meetings  of  the  board  of  directors,  and  if  authorized  to  do  so  by  the  by-laws,  also  over 
the  meetings  of  the  stockholders.  He  can  bind  the  corporation  in  most  routine  matters, 
and  usually  affixes  the  corporate  signature  to  instruments  recjuiring  such  signature.  Other 
matters  of  unusual  importance  or  outside  of  the  regular  routine  must  be  specially  authorized 
by  the  board  to  bind  the  corporation. 

The  president  is  usually  required  to  exercise  a  general  supervision  over  all  the  corporate 
business,  and  when  necessary  or  required,  make  reports  to  the  board  of  directors  and  to  the 
stockholders  of  the  condition  of  the  affairs  of  the  corporations.  He  is  generally  required, 
with  the  secretary  or  treasurer  of  industrial  corporations,  and  with  the  secretary  or  treasurer 
of  financial  corporations,  to  sign  the  certificates  of  stock.  The  president  must  be  a  member 
of  the  board  of  directors,  and  as  a  director,  he  must  be  a  stockholder  in  the  corporation. 

The  Secretary.  —  The  duties  of  the  secretary  of  a  corporation  are,  among  other  things, 
to  keep  a  record  of  the  proceedings  of  the  stockholders  and  directors,  and  such  other  records 
as  do  not  pertain  to  the  work  of  the  treasurer.  The  secretary  is  usually  custodian  of  the 
corporate  seal.  He  need  not  be  either  a  member  of  the  board  of  directors  or  a  stockholder 
in  the  corporation,  although  he  is  sometimes  both  of  these.  He  is  usually  required  to  take 
an  oath  of  office,  binding  himself  to  the  faithful  performance  of  his  duties. 

The  Treasurer  is  the  financial  officer  of  the  corporation.  His  duties  vary  in  different  con- 
cerns. In  the  smaller  corporations,  besides  having  custody  of  the  funds  and  securities  of 
the  company,  he  has  direct  supervision  of  the  accounts,  and  keeps  the  general  or  business 
books.  In  the  larger  corporations,  the  accounting  is  under  the  direction  of  a  controller  or 
an  auditor,  and  the  purely  financial  operations  are  in  charge  of  the  treasurer  and  his  assist- 
ants.    The  treasurer  is  responsible  to  the  board  of  directors,  or  to  the  finance  committee 


2&2 


MODERN  1I.LUSTR;\T1VE  BOOKKEEPING 


Stock  Ckktificate  Book 

ci_/^^^ ^fr  •.&<A'&vA'^^ $L'jB^A^^i.j^> ^&v>^fc>t/aa\t  J 


(Of^yf/rrr/Zr 


fihOhgiiial 
OHtTtcalf 


XoOngitiat 
Sha/rx. 


Tnuis/ffml. 


^rf'  .-^irt^^ Mair.: 


when  such  a  committee  exists.  He  need  not  be  either  a  stockholder  or  a  member  of  the 
board  of  directors,  although  he  may  be  either  or  both  of  these.  He  is  usually  required  to 
give  a  bond  ;  and  in  some  states  must  give  a  bond  in  such  amount  as  the  by-laws  shall  fix  and 
determine. 

Books  of  a  Corporation.  —  Tiiere  is  no  system  of  bookkeeping  peculiar  to  a  corporation. 
The  business  transactions  of  a  corporation  do  not  dilTer  in  form  from  those  of  a  partnership 
or  of  an  individual  i)roprietor.  The  volume  of  business  is  usually  greater  than  that  done  bv 
an  individual,  but  this  affects  only  the  number,  and  not  tlie  kind  nor  necessarily  the  form 
of  the  books  used.  ICach  corporation,  excepting  where  the  form  of  its  accounts  is  regulated 
by  law,  keeps  its  books,  like  all  other  concerns,  in  accordance  with  its  own  methods  and  the 
general  principles  of  accounts.  A  few  of  the  accounts  of  a  corporation  will  differ  from  those 
of  a  private  concern,  and  the  form  of  its  statements  may  also  be  different,  but  otherwise  the 
general  records  are  ])ractically  the  same  in  both  cases. 

Corporate  Books.  — The  only  books  which  are  peculiar  to  a  corporation  are  those  which 
show  ilie  operations  connected  with  the  corporate  form  of  the  concern,  and  contain  a  record 
of  tlie  corporate  proceedings,  and  of  the  issuance  and  transfer  of  its  stock. 

The  special  books  of  a  corporation  are  the  minute  book,  subscription  book,  stock  certifi- 
cate book,  stock  ledger,  stock  transfer  book,  and  dividend  book. 

The  minute  book  contains  a  record  of  the  proceedings  of  the  stockholders  and  of  the 
board  of  directors.  Sometimes  sc]5arate  minute  books  are  kept  for  the  proceedings  of  the 
stockholders  and  those  of  the  board  of  directors.  All  entries  in  the  minute  book  should  be 
made  bv  the  .secretary,  and  the  book  retained  in  his  custodv.  The  usual  form  of  a  minute 
book  is  that  of  an  ordinary  "  record  "  book,  the  pages  of  which  are  ruled  like  a  sheet  of  legal 
taj)  iiaper. 


CORPORATION'S 


208 


The  subscription  book  contains  a  list  of  the  subscribers  to  the  stock,  with  the  number  and 
par  vakie  of  the  shares  subscribed  for  by  each.  If  stock  is  paid  for  in  installments,  a  sepa- 
rate space  for  each  installment  should  be  provided  in  the  subscription  book,  or  a  separate 
installment  book  may  be  used. 

The  stock  certificate  book  is  a  book  of  blank  certificates  and  stubs,  and  the.se  certificates 
are  issued  to  the  stockholders  as  soon  as  their  subscriptions  are  fully  paid.  (.See  form,  page 
262.)  The  stubs  are  filled  out  before  the  certificates  are  detached,  and  from  them  is  made 
up  the  credit  side  of  the  stock  ledger,  in  which  each  stockholder  receives  credit  for  tlie  num- 
ber of  shares  held  by  him. 

On  the  back  of  each  certificate  is  a  blank  bill  of  sale  or  form  of  assignment,  by  which  a 
stockholder  may  transfer  his  stock  to  any  other  person. 

When  a  certificate  is  surrendered,  it  is  stamped  "canceled,"  and  pasted  on  to  its  own 
stub  in  the  stock  certificate  book. 

The  transfer  book  is  a  book  of  printed  forms  and  blanks  to  be  filled  in  whenever  a  stock- 
holder sells  his  stock,  or  any  part  of  it,  to  another  person.  A  stock  certificate,  when  signed 
by  the  seller  or  his  attorney,  authorizes  the  transfer  of  a  certain  number  of  shares  of  stock 
from  the  account  of  the  seller  to  the  account  of  some  other  person  named  in  the  certificate. 
The  transfer  book  serves  as  a  journal  to  the  stock  ledger,  and  from  it  are  made  all  entries 
after  the  original  stock  issue  of  the  business  has  been  entered  in  the  stock  ledger. 

Stock  Tk.wsfer  Book 


3a^ 


^ 


2-/70 


^^ 


TRANSFERRED   BY 


4^r?^., 


Jor  Dalue  K^ccicsb, 


I,   tr;f  doi 


hereby  assign  and  transfer  to 


;.  jC/^y-r^^  '::^At^.^^P9..f^^^L-^ 


_  Shares  of  the  Capital  Stock  of 

Cb«  Central  Hational  BanR  of  Pittsburgh,  Pa. 

IPittlcss^jiiiia^hand     and  seal     ,  this  .jil  day  ei    i;,^,/,;; ^^  1 R9 ^ 
Sealed  and  delivered  in  the  presence  of  ^'^~^^^^^  ^^^ — ^  /^ 


The  stock  ledger  is  auxiliary  to  the  general  ledger,  and  its  credit  balance  should  always 
agree  with  the  Capital  Stock  balance  in  the  general  ledger.  The  stock  ledger  contains  the 
name  of  every  person  holding  stock  of  the  company,  either  bv  original  issue  or  by  transfer. 
It  is  made  up  originallv  from  the  stubs  of  the  stock  certificate  book,  and  as  the  stock  is 
issued,  each  holder  is  credited  in  the  stock  ledger  with  the  par  value  of  the  stock.  After 
the  opening  entries,  all  entries  in  the  stock  ledger  should  be  made  from  the  stub  of  the  trans- 
fer book.  These  entries  always  consist  of  a  debit  to  a  seller  of  stock  whose  name  is  already 
in  the  stock  ledger,  and  a  credit  of  an  equal  amount  to  the  buyer,  whose  name  must  be 
entered  in  the  stock  ledger. 

The  dividend  book  contains  the  names  of  all  persons  who  have  open  accounts  in  the  stock 
ledger,  and  opposite  the  name  of  each  person  is  recorded  the  amount  due  him  when  a  divi- 
dend is  declared.     This  book  may  contain  a  space  for  the  signature  of  each  stockholder 


2f.4 


M(i|)1;KN    II.l.l  si  RAl  IVK    BOOKKKKI'ING 


acknowledging  the  receipt  of  liis  dividend,  but  in  the  larger  corporations  these  dividends  are 
generally  paid  by  voucher  checks  which  are  in  themselves  receipts. 

The  following  forms  illustrate  the  dividend  book  and  the  dividend  check. 

DivinENn  Book 


ft^A^  Semi- Annual  Dividend,  iu-c/^  /.  /^//.   / 


^ 


NAME   OP   STOCkHOLI'tr 


Z^^^'^.^. 


/  ffff 


/J'H 


4^<? 


2-i^fi 


/  ffO 


:^ffc 


f/miLo: 


^^;^^, 


\^ 


DivioKNn  Check 


.Vn.  -?.■?/■ 


'  //. 


Pay  TO  THE  ORDER  OF  -'    ^^  ^        37  / 


-e^^^A. 


-^-T*?  *<f. 


Transfer  Agents. — Among  the  larger  coriiorations  it  is  customary  to  appoint  transfer 
agents  who  attend  to  the  issue  and  the  transfer  of  stock,  and  who  should  have  charge  of  the 
stock  certificate  book,  the  stock  ledger,  and  the  transfer  book,  which  relieves  the  secretary  of 
a  great  deal  of  labor  and  responsibility. 

Special  Corporate  Accounts.  —  A  few  accounts  are  peculiar  to  corporations,  such  as  Capi- 
tal Slock  account,  Treasury  Stock  account.  Subscription  account,  Donation  account.  Surplus 
account.  Dividend  account,  etc.,  and  these  take  the  place  of  capital  and  reserve  accounts 
in  proprietary  or  partnership  businesses. 


CORPORATION'S  265 

Good  Will. — The  business  activity  of  private  concerns  is  dependent  upon  tiie  voluntary 
patronage  of  the  pubHc,  and  to  the  extent  that  this  patronage  is  secured,  it  affects  the 
growth  or  stabiHty,  or  both,  of  the  business  of  that  concern.  When  a  business  has  secured 
a  patronage  which  is  Ukely  to  continue,  even  though  the  ownership  or  location  of  the  busi- 
ness, or  both,  should  change,  it  constitutes  a  vahiable  asset  to  that  business.  This  is  called 
"  good  will."  In  the  sale  and  taking  over  of  a  going  business,  the  value  of  its  good  will  is 
alvva)'s  a  matter  of  agreement  between  the  parties  concerned,  and  is  carried  as  an  asset  on 
the  books  of  the  new  concern  at  cost,  until  some  adjustment  of  it  has  been  made.  Some 
concerns  charge  off  at  intervals  a  portion  of  the  cost  of  good  will,  until  the  whole  amount 
has  been  absorbed  through  the  profits,  while  others  carry  it  as  a  permanent  asset.  The 
former  is  regarded  the  better  practice,  especially  for  corporations. 

PROPOSITIONS 

The  following  propositions  are  given  for  the  purpose  of  illustrating  the  opening  and 
closing    of    corporation  books,   and  the  entries  to  be  made  when    dividends  are   declared. 

1.  James  Brown,  WiUiam  Harper,  Charles  Edwards,  Maurice  Chaney,  and  William  Up- 
ton have  formed  the  American  Motor-Truck  Company  with  a  capital  stock  of  $100000,  of 
which  Brown,  Harper,  and  Edwards  have  subscribed  $30000  each,  and  Chaney  and  Upton, 
S5000  each.  The  minute  book  will  show  the  proceedings  of  such  meetings  as  have  been 
held,  and  as  soon  as  all  the  stock  is  subscribed  for,  the  following  journal  entry  should  be 
frametl  : 

Subscription,  $  looooo 

Capital  Stock,  ^i 00000 

This  entry  should  be  posted  to  the  general  ledger. 

Suppose  the  stock  subscriptions  are  to  be  paid  in  two  installments,  one  due  January  I, 
and  the  other  February  i.  When  the  first  of  these  installments  is  paid,  the  cash  book  of 
the  corporation  should  contain  a  debit  entry  of  S  50000,  and  Subscription  should  be  credited 
for  this  amount.  When  this  entry  has  been  posted  to  the  general  ledger,  it  will  cancel  half 
the  Subscription  account.  When  the  second  installment  is  paid,  a  similar  entry  should  be 
framed  in  the  cash  book;  and  when  this  entry  has  been  posted,  it  will  balance  the  Sub- 
scription account. 

The  stock  will  now  be  issued,  and  from  the  stub  of  the  stock  certificate  book  each  of  the 
subscribers  should  be  credited  in  the  stock  ledger  with  the  amount  of  the  stock  issued  to 
him. 

2.  A  corporation  is  formed  to  acquire  the  patent  rights  of  an  envelope  sealing  machine 
invented  by  William  Waugh,  and  to  manufacture  and  sell  the  same.  The  authorized  capi- 
tal stock  is  $50000,  and  the  par  value  of  the  shares  is  $  10  per  share.  Waugh  is  to  receive 
2500  shares  of  the  stock  in  exchange  for  his  rights  in  the  patent.  A  subscribes  for  1000 
shares,  B,  1000  shares,  and  C,  500  shares,  which  subscriptions  are  to  be  paid  in  cash.  The 
opening  entry  in  the  journal  of  the  corporation  would  be  : 

Subscription,  $25000 

Patent  Rights,  $25000 

Capital  Stock,  $  50000 

When  the  subscriptions  are  paid,  an  entry  would  be  made  in  the  cash  book,  crediting 
Subscription,  $25000,  which,  when  posted,  would  balance  the  Subscription  account. 


2tjtj  MODKRN    ILLUSTRATIVE   BOOKKEKriNT. 

Suppose  later  Waugh  should  donate  lOOO  shares  of  the  stock  to  the  company,  which, 
it  is  estimated,  can  be  sold  for  S6000,  to  ])rovide  additional  working  capital  when  needetl, 
and  this  stock  is  placed  in  the  treasury.  There  are  two  ways  of  treating  a  transaction  of 
this  kind.     The  first  is  to  frame  a  journal  entry  : 

Treasury  Stock,  S6000 

Donation,  5  6000 

When  this  stock  is  sold.  Treasury  Stock  is  credited  for  S6000  in  the  cash  book,  and  a 
journal  entry  is  framed  debiting  Donation  account  and  crediting  Surplus  account  for  the 
amount  received  from  the  sale  of  the  treasury  stock. 

A  second  and  better  way  is  to  credit  the  account  for  which  the  stock  was  first  issued, 
which  in  this  case  is  Patent  Rights,  and  the  entry  would  be: 

Treasury  Stock,  S6000 

Patent  Rights,  S6000 

This  would  reduce  the  cost  of  the  j^atent  rights  to  the  company  by  the  amount  of  the 
estimated  value  of  the  stock  donated. 

If  the  stock  were  sold  for  more  or  less  than  its  estimated  value,  the  actual  amount  re- 
ceived would  be  credited  to  Treasury  Stock  in  the  cash  book,  and  a  journal  entry  would  be 
framed  to  adjust  the  difference.  If  sold  for,  say,  31000  more  than  its  estimated  value,  the 
entry  would  be  : 

Treasury  Stock,  S 1000 

Patent  Rights,  Si 000 

If  sold  for  less  than  its  estimated  value,  the  reverse  entry  would  be  framed  for  the 
amount  of  the  difference. 

3.  The  firm  of  Warren  &  Carson  have  been  engaged  in  the  manufacture  of  furniture, 
and  they  transfer  their  business  to  the  Warren  &  Carson  Manufacturing  Company,  with 
a  capital  stock  of  S  looooo,  par  value  of  the  shares,  Sioo;  the  stock  to  be  divided  as  fol- 
lows :  W.  A.  Warren  to  receive  500  shares,  and  E.  B.  Carson  250  shares.  C.  M.  Harris 
has  subscribed  for  50  shares;  D.  J.  Jones,  50  shares;  D.  E.  Leavitt,'50  shares;  and  100 
shares  are  unissued,  to  be  issued  and  disposed  of  for  the  benefit  of  the  business  when  so 
voted  by  the  directors.  The  assets  and  liabilities  of  the  firm  of  Warren  &  Carson  are  as 
follows:  Assc'h-. — Cash,  S7500;  Notes  Receivable,  $22690.50;  Accounts  Receivable, 
S41987.50;  Merchandise,  S49800;  Unfinished  Goods,  S24200;  Raw  Materials,  S  38700 ; 
Real  Estate,  S  20000;  Total  Assets,  S  204878.  Liabilities.  —  Notes  Payable,  S  46965. 50; 
Accounts  Payable,  $72912.50;  Mortgages  Payable,  S15000;  Total  Liabilities,  S 134878. 
Warren's  net  worth,  S 46064. 75  ;   Carson's  net  worth,  S23935.25. 

If  it  is  desired  to  open  a  new  set  of  books,  as  is  generally  the  case  when  a  new  corpora- 
tion is  formed,  it  is  customary  first  to  close  the  old  books,  which  should  be  done  by  framing 
a  journal  entry,  debiting  the  Warren  &  Carson  Furniture  Company  for  the  total  amount  of 
the  assets,  and  crediting  each  asset  account  for  its  respective  amount.  Posting  this  entry 
will  balance  the  asset  account.  Tlien  a  journal  entry  should  be  framed,  debiting  the  liability 
accounts  for  their  respective  amounts,  and  the  separate  accounts  of  the  jiartners  for  their 
respective  amounts,  and  crediting  the  Warren  &  Carson  Furniture  Company  for  the  total. 
Posting  this  entry  will  close  all  liability  accounts,  the  partners'  accounts,  and  also  balance 
the  Warren  &  Carson  Furniture  Company  account,  and  close  the  books  of  the  old  business. 

One  journal  entry  could  be  framed  instead  of  two,  debiting  the  assets  and  crediting  the 


CORPORATIONS 


liabilities  and  the  partners.     This  would  avoid  the  necessity  of  constructing  an  account  on 
the  old  books  with  the  Warren  &  Carson  Furniture  Company. 

To  open  the  corporation  books,  the  amount  of  the  subscribed  capital  stock,  S 90000, 
must  appear  on  the  credit  side  of  the  general  ledger,  the  amount  of  the  assets  of  the  old 
business  must  appear  as  debit  balances,  and  the  liabilities  as  credit  balances.  The  names 
of  Warren  and  Carson  must  not  appear  in  the  general  ledger  of  the  corporation,  as  their 
worth  at  closing  has  been  absorbed  by  the  capital  stock.  A  journal  entry  should  be  framed 
for  the  above  as  follows  : 

Cash, 

Notes  Receivable, 

Accounts  Receivable, 

Merchandise, 

Unfinished  Goods, 

Raw  Materials, 

Real  Estate, 

Good  Will, 

Subscription, 


$  7500. 

22690.50 

41987.50 

49800. 

24200. 

38700. 

20000. 

5000. 

1 5000. 

Notes  Payable, 

$46965.50 

Accounts  Payable, 

72912.50 

Mortgages  Payable, 

1 5000. 

Capital  Stock, 

90000. 

Referring  to  the  statement  of  assets  and  liabilities  of  Warren  &  Carson,  it  will  be  seen 
that  the  actual  difference  between  the  assets  and  liabilities  of  that  firm  is  $70000.  For  this 
amount,  E.  A.  Warren  has  received  $50000  of  the  capital  stock  in  the  new  corporation,  and 
E.  B.  Carson,  $25000,  a  total  of  $75000,  or  $5000  more  than  the  actual  difference  between 
the  assets  and  liabilities  of  the  firm.  This  difference  represents  the  agreed  value  of  the 
good  will  of  the  old  business,  and  thus  Good  Will  should  be  debited  for  $5000,  since  it 
costs  the  new  business  that  much,  and  is  regarded  an  asset.  The  remaining  $  15000  of  the 
$90000  capital  stock  issued  is  balanced  by  the  debit  of  Subscription,  $15000.  When  this 
journal  entry  has  been  posted  to  the  general  ledger  of  the  new  books,  the  books  of  the 
corporation  are  correctly  opened.  Warren  should  receive  stock  certificates  of  the  par  value 
of  $50000,  and  Carson  stock  certificates  of  the  par  value  of  $25000. 

When  the  subscriptions  of  the  new  stockholders,  Harris,  Jones,  and  Leavitt,  are  paid, 
an  entry  in  the  cash  book  crediting  Subscription  for  $15000  would  be  made,  and  stock 
issued  to  Harris,  Jones,  and  Leavitt,  to  the  par  value  of  $  5000  each,  making  a  total  of 
$90000,  which  is  the  amount  of  the  stock  subscribed  and  issued,  and  also  the  amount  of 
the  paid-up  capital  of  the  company.  The  stock  issued  would  appear  on  the  credit  side 
of  the  stock  ledger  under  the  accounts  of  the  respective  stockholders.  The  cash  item  in 
the  journal  would  be  checked,  since  the  amount  appears  in  the  cash  book. 

In  the  proposition  just  advanced  and  explained,  let  us  suppose  that  the  corporation  does 
not  care  to  go  to  the  expense  of  purchasing  new  books,  but  desires  to  make  such  entries  as 
will  continue  the  books  of  the  partnership  as  corporation  books.  E.xamining  the  above 
journal  entry,  it  will  be  seen  that  the  accounts  showing  the  assets  and  liabilities  of  the  old 
business  are  not  changed  after  they  have  been  closed  in  the  books  of  the  partnership  and 
transferred  to  the  books  of  the  corporation.  Therefore  no  entries  for  these  accounts  are 
necessary,  as  they  will  have  the  same  balances  in  either  form  of  business. 


268  MODERN    ILLUSTRATIVE   BtlOKKLKI'ING 

To  change  the  books  from  the  partnership  form  to  the  corporate  form,  the  following 
journal  entry  is  framed  : 

W.  A.  Warren,  S46664.75 

E.  B.  Carson,  23335.25 

Good  Will,  5000. 

Subscription,  15000. 

Capital  Stock  S  90000. 

When  this  entry  has  been  posted  to  the  general  ledger,  the  books  of  the  old  business 
are  correctly  opened  as  corporation  books. 

The  stock'  ledger,  of  course,  will  be  opened  exactly  as  in  the  first  proposition,  since  the 
conditions  are  not  changed.  The  capital  stock  is  made  up  of  the  surplus  of  assets  over 
liabilities  (which  is  shown  by  the  net  worth  of  W.  A.  Warren  and  K.  H.  Carson);  of  good 
will,  $5000;  of  subscription.  Si 5000.  The  above  journal  entry  when  posted  will  balance 
the  personal  accounts  of  Warren  and  Carson,  and  also  show  the  amount  of  subscription 
due  and  the  value  of  the  good  will,  while  Warren  and  Carson  will  receive  credit  on  the  stock 
ledger  for  S  75000  worth  of  capital  stock,  leaving  the  remaining  S  15000  to  be  credited  to  the 
proper  persons  when  the  subscriptions  are  ])aid. 

4.  The  balance  sheet  of  the  Waugh  Envelope  Sealing  Machine  Company,  capital  stock 
S  50000,  for  the  year  ending  December  31,  19 — ,  showed  net  earnings  for  the  current  period 
of  $18375.84,  which  amount  was  carried  to  -Surplus  account.  The  directors  on  January  10 
declared  a  semiannual  dividend  of  3'/  on  the  capital  stock,  the  stock  books  to  close 
January  15  and  reojien   February  i.     The  entry  for  the  declared  dividend  would  be: 

Surplus,  ,  Si  5000 

Dividend,  $  1 5000 

When  the  dividend  is  paid,  the  Dividend  account  would  be  debited  in  the  cash  book, 
which  would  balance  the  Dividend  account  for  the  period. 

5.  The  balance  sheet  of  the  Harper  Shoe  Company  for  December  31,  19 — ,  shows  that 
the  liabilities  exceed  the  assets  by  5>  13250.  At  a  meeting  of  the  stockholders,  it  was  decided, 
in  view  of  the  prospects  of  the  company,  to  meet  the  deficiency  by  a  voluntary  assessment. 
When  the  books  are  closed  as  of  December  31,  19 — ,  an  Impairhient  account  should  be  con- 
structed to  represent  the  deficit.  The  entry  which  would  be  framed  to  close  the  Profit 
and  Loss  account  would  be  : 

Impairment,  S 13250. 

Profit  and  Loss,  $13250 

When  the  assessment  is  levied,  each  stockholder  should  be  charged  with  his  proportion- 
ate share  in  the  stock  ledger,  and  a  journal  entry  should  be  framed,  debiting  Assessment 
and  crediting  Impairment  for  the  amount  of  the  assessment.  When  this  entry  has  been 
posted,  the  Im])airment  account  will  balance,  and  when  the  assessment  has  all  been  paid, 
and  the  proper  entry  framed  and  posted,  Assessment  account  will  balance. 

EXERCISES 

The  entries  for  the  following  exercises,  with  proper  explanations,  are  to  be  framed  on 
loose  paper.     No  posting  is  required. 

L  A,  H,  and  C  have  organized  a  corpi)rati<)n  for  the  purjiose  of  building  and  operating 
an  electric  light  plant,  and  of  selling  current  to  the  public.     The  authorized  capital  stock  is 


CORPORATKJN.S  269 

S2000000,  par  value  of  the  shares  S  lOO.  A  subscribed  for  500  shares,  H,  300  shares.'and 
C,  200  shares.  Other  subscriptions  aggregated  7000  shares.  The  subscriptions  were  all 
paid  in  cash,  and  later  1000  additional  shares  were  subscribed  for  and  paid  in  cash. 

Frame  proper  entries  for  the  above  transactions,  and  state  the  amount  of  stock  remaining 
unissued. 

2.  To  raise  working  capital,  the  stockholders  of  the  Oro  Mining  Comi)any  donated  loooo 
shares  of  the  stock  of  the  company  to  the  treasury.  The  par  value  of  the  stock  is  S5,  and 
it  was  estimated  that  it  would  sell  for  an  average  of  S  2.50  per  share.  The  treasurer  reported 
that  he  had  sold  1000  shares  at  $3,  2500  at  S2.75,  5000  at  $2.50,  looo  at  $2.25,  and  500  at  $2. 

Frame  proper  entries  for  the  above  transactions,  using  the  first  method  explained  in 
proposition  2,  page  266. 

3.  A  corporation  is  formed  with  an  authorized  capital  of  S  200000,  par  value  of  the  shares 
Sioo,  to  take  over  a  manufacturing  business  conducted  by  A  and  B  as  a  partnership.  The 
assets  are  to  be  taken  at  their  book  values,  and  the  partners  are  to  guarantee  the  full  pay- 
ment of  all  outstanding  notes  receivable  and  accounts  receivable.  Each  partner  is  to  receive 
575000  in  stock  for  his  interest  in  the  old  business,  and  ;S  50000  of  stock  is  to  be  offered 
for  subscription  at  par,  to  provide  additional  working  capital. 

The  balance  sheet  of  the  old  business  shows  the  following  assets  and  liabilities  :  Assets. 
—  Cash,  S  10375.25  ;  Accounts  Receivable,  $34216.81  ;  Notes  Receivable,  S  18642.34  ;  Fin- 
ished Products,  S  242 11.96  ;  Goods  in  Process,  $13687.25  ;  Materials,  $  1  5134.52  ;  Machin- 
ery and  Equipment,  $35917;  Furniture  and  Fi.xtures,  $1252;  Office  Supplies,  §875.50; 
Shipping  Supplies,  $217.75;  Insurance  on  Goods,  $  1 12.25.  Liabilities.  —  Notes  Payable, 
S15875.25;   Accounts  Payable,  $  13767.38.     A's  capital,  $62500 ;   B's  capital,  $62500. 

Assuming  that  a  new  set  of  books  is  to  be  opened,  and  that  C  has  subscribed  for  200 
shares,  and  D  300  shares,  frame  the  journal  entry  that  should  be  made  on  the  corporation 
books  when  the  old  business  is  taken  over.  Frame  the  entry  that  should  be  made  when  the 
subscriptions  are  paid,  and  state  in  what  other  books  records  would  be  made  for  the  trans- 
actions. 

4.  The  balance  sheet  of  the  Consolidated  Electric  Manufacturers  Company  for  Dec.  31, 
19 — ,  showed  the  following  assets  and  liabilities,  exclusive  of  surplus  or  deficit;  Assets. — 
Cost  of  properties,  including  trade  marks,  patent  rights,  real  estate,  building  and  machinery, 
S  16359861.95;  Investments  in  affiliated  companies,  $575000;  Deferred  charges  to  operations  : 
insurance,  interest  and  other  periodical  expenses,  $143146.89.  Current  assets.  —  Invento- 
ries of  raw  material,  manufactured  products,  and  supplies  on  hand,  $4077973.79;  Accounts 
Receivable,  $  1892705.86,  less  reserve  for  discounts,  S50000.  Notes  Receivable,  $  128680.01  ; 
Cash  on  hand  and  in  banks,  $572680.22.  Current  liabilities.  —  Notes  Payable,  $2661563; 
Loans,  $372176.64;  Accounts  Payable,  $158544.33.  Capital  stock  authorized  and  issued  — 
Preferred  shares,  $100  each,  $5000000;  Common  shares,  $100  each,  $15000000. 

From  the  above  data  prepare  a  balance  sheet,  including  surplus  or  deficit,  and  arrange 
the  assets  and  liabilities  in  the  order  of  fixed  and  floating,  with  the  quickest  or  most  liquid 
asset  last. 

If  the  balance  sheet  shows  a  surplus,  assume  that  a  dividend  of  i| '/>  was  declared  on  the 
preferred  stock  for  the  period  by  the  directors,  and  frame  the  entry  that  should  be  made  for 
such  declaration. 

5.  Assume  that  the  balance  sheet  of  the  above  corporation  showed  a  deficit  for  the  period 
ending  June  30,  19 — ,  of  $75162.19,  and  that  there  was  no  previous  surplus,  and  that  no 
assessment  had  been  levied.     State  first,  what  the  net  earnings  for  the  current  period,  avail- 


270  MODKKN    U.l.LSI'KAinE   BOUKKEEI'INU 

able  for  cliviclciids,  must  have  been  in  order  to  wipe  out  the  deficit  and  siiow  the  surphis  as 
disclosed  by  the  balance  sheet.  Second,  frame  the  entry  that  would  be  made  as  of  De- 
cember 31,  19 — ,  which  would  balance  the  account  which  represented  the  deficit,  and  create 
an  account  which  would  represent  the  surplus  shown  by  the  balance  sheet. 

QUESTIONS 

1.  What  is  a  corporation  .' 

2.  Of  what  is  a  corporation  composed,  and  how  does  it  differ  from  a  partnership  ? 

3.  How  many  general  classes  of  corporations  are  there  ?     -State  what  they  are.  and  describe  eacli  class. 

4.  What   advantages  and  disadvantages  do  individual  and  partnership  forms  of  business  organization 
possess  over  the  corporate  form  ? 

5.  Define  a  trust  ;    a  Iiolding  company. 

6.  Wliat  is  meant  by  government  supervision,  and  liow  is  it  exercised  ? 

7.  How  are  corporations  created  ? 

8.  How  are  corporations  formed  ?     Explain  in  detail  how  a  corporation  may  be  formed  in  your  state. 

9.  Explain  the  difference  between  a  -domestic  corporation"'  and  a  '-foreign  corjjoration." 

10.  How  is  the  capital  stock  of  a  corporation  represented  .'     E.\plain  the  different  phases  of  this  represen- 
tation.    Wliat  is  treasury  stock  ?     How  is  it  treated  on  the  books  .' 

1 1 .  What  is  a  bond,  as  the  term  applies  to  corporation  securities  ?     Describe  the  different  kinds  of  bonds, 
and  state  how  bonds  differ  from  stocks. 

12.  How^  arc  the  profits  and  lo.sses  of  corporations  found  ?     How  are  the  net  profls  distributed  ? 

13.  What  is  meant  by  "surplus"  ?     What  purpose  does  it  frequently  serve  ? 

14.  I!y  wliom  are  corporations  managed?     Explain  how  their  autliority  is  obtained. 

15.  What  are  the  usual  officers  of  a  corporation  ?     Tlie  additional  officers  ? 

16.  What  arc  tlie  duties  of  the  secretary  ?     How  is  he  sometimes  relieved  of  a  part  of  his  duties  ? 

17.  What  relation  does  the  treasurer  sustain  to  the  corporation  .'     Explain  his  duties  (1)  in  small  corpora- 
tions, and  (2)  in  large  corporations. 

18.  Is  tliere  a  system  of  bookkeeping  peculiar  to  corporations  ?     Give  a  reason  for  your  answer. 

19.  What  books  are  peculiar  to  corporations,  and  for  what  purposes  are  they  used  ? 

20.  What  accounts  are  peculiar  to  corporations,  and  what  accounts  do  they  take  the  pl.ace  of  in  proprietarv 
and  partnership  businesses  ? 

21.  What  Is  meant  by  "good  will.""  and  how  is  Its  value  determined  ?     How  is  it  treated  on  the  books  ? 
How  may  it  be  disposed  of  on  the  books  ? 

22.  When  a  going  business  is  transferred  to  a  corporation,  what  are  the  names  of  some  of  llie  new  accounts 
which  will  be  constructed  ? 

23.  Explain  the  steps  to  be  taken,  and  the  entries  to  I)e  made,  when  a  going  business  is  transferred  to  a  cor- 
poration, and  a  new  set  of  books  is  opened. 

24.  What  entries,  when  the  old  books  are  continued  ? 

25.  What  entries  would  be  made  when  stock  Is  donated  to  the  company  and  afterwards  sold  for  cash  ? 
Explain  both  methods. 


MANUFACTURING 

Manufacturing  is  tlie  converting  of  materials  into  finished  products.  All  materials  in 
their  natural  or  raw  state  are  the  products  of  nature,  and  when  used  for  manufacturing 
purposes  are  called  "raw  materials."  Converted  materials  are  called  "manufactured  prod- 
ucts," or  "  finished  goods."  Things  which  are  called  finished  goods  in  some  industries  are 
classed  as  raw  materials  in  others. 

Production.  —  Production  is  of  two  kinds,  natural  and  industrial.  Originally,  industrial 
production,  or  manufacturing,  was  done  almost  entirely  by  handicraft,  but  now  machinery 
has  largely  supplanted  hand  work  in  many  of  the  operations.  The  substitution  of  me 
chanical  for  human  forces  in  manufacturing  results  generally  in  saving  of  labor,  increase 
of  output,  reduction  in  cost,  and  improvement  in  products. 

Disposition  of  Products.  —  Some  manufacturers  dispose  of  their  products  through  jobbers, 
commission  merchants,  or  manufacturers'  agents,  while  others  maintain  regular  sales  depart- 
ments, through  which  their  products  are  distributed  to  the  wholesale  trade.  Concerns  of  the 
latter  kind  are  both  manufacturers  and  wholesalers.  Still  other  manufacturers  dispose  of 
their  products  direct  to  the  consumers,  through  the  medium  of  retail  stores,  established  and 
conducted  as  a  part  of  their  business.  This  class  of  concerns  are  both  manufacturers  and 
retailers. 

The  Factory  System.  —  In  the  early  stages  of  industrial  production,  manufacturing  was 
carried  on  by  the  individual,  working  independently,  or  by  the  family  working  as  a  unit. 
Since  the  invention  of  machinery,  and  especially  of  the  steam  engine,  which  enlarged  the 
field  of  machine  operation,  the  old  systems  have  been  practically  superseded  by  the  "  factory 
system,"  which  combines  the  forces  of  labor,  machinery,  and  administration  into  definite  and 
effective  units.  The  factory  system  is  a  universal  method  of  industrial  production,  which 
can  be  applied  to  practically  all  kinds  of  manufacturing. 

Factory  Organization.  —  The  purpose  of  organization  is  to  increase  the  effectiveness  of 
action.  It  enables  a  number  of  persons  to  operate  more  effectively  as  a  concrete  unit  than 
they  could  as  independent  imits.  It  jiermits  of  division  of  labor,  which,  in  industrial  opera- 
tions, results  in  increase  of  skill  and  of  productivity.  Division  of  labor  also  results  in 
specializing,  or  the  concentration  of  thought  and  effort  on  a  particular  thing,  thereby  greatly 
increasing  the  efficiency  of  the  operator. 

The  modern  factory  is  a  model  of  industrial  organization.  It  is  thoroughly  department- 
alized, and  every  department  is  so  operated  as  to  contribute  its  due  share  to  the  purpose  of 
the  factory,  and  to  the  success  of  the  business,  and  results  in  greater  efficiency,  increased 
output,  and  lower  costs. 

Factory  Efficiency. —  Efficiency,  as  applied  to  manufacturing,  is  based  on  a  comparison 
between  the  quantity  and  quality  of  output,  and  the  time,  labor,  and  money  expended  upon 
it ;  or  results  compared  with  costs.      Efficiency  is  obtained  by  saving  in  labor,  the  result  of 

271 


270  MUUEKN    U.LLSlUAinE   BOOKKEliPlNtJ 

able  for  dividends,  must  have  been  in  order  to  wipe  out  the  deficit  and  show  the  surphis  as 
disclosed  by  the  balance  sheet.  Second,  frame  the  entry  that  would  be  made  as  of  De- 
cember 31,  19 — ,  which  would  balance  the  account  which  represented  the  deficit,  and  create 
an  account  which  would  represent  the  surplus  shown  by  the  balance  sheet. 

QUESTIONS 

1.  What  is  a  corporation  ? 

2.  Of  what  is  a  corporation  composed,  and  how  does  it  differ  from  a  partnership  ? 

3.  How  many  general  classes  of  corporations  are  there  ?     State  what  tliey  arc.  and  describe  eacli  class. 

4.  What  advantages  and  disadvantages  do  individual  and  partnership  forms  of  business  organization 
possess  over  the  corporate  form  ? 

5.  Define  a  trust  ;    a  holding  company. 

6.  What  is  meant  by  government  supervision,  and  how  is  it  exercised  ? 

7.  How  are  corporations  created  ? 

8.  How  are  corporations  formed  ?     Explain  in  detail  how  a  corporation  may  be  formed  in  your  state. 

9.  Explain  the  difference  between  a  "domestic  corporation"'  and  a  "foreign  corporation." 

10.  How  is  the  capital  stock  of  a  corporation  represented  ?     E.xplain  the  different  phases  of  this  represen- 
tation.    What  is  treasury  stock  ?     How  is  it  treated  on  the  books .' 

1 1 .  What  is  a  bond,  as  the  term  applies  to  corporation  securities  ?     Describe  the  different  kinds  of  bonds, 
and  state  how  bonds  differ  from  stocks. 

12.  How  are  the  profits  and  lo.sses  of  corporations  found  ?     How  are  the  net  prof^ls  distributed  ? 

13.  What  is  meant  by  "surplus"  ?     What  purpose  does  it  frequently  serve  ? 

14.  I5y  whom  are  corporations  managed?     Explain  how  their  authority  is  obtained. 

15.  What  are  the  usual  officers  of  a  corporation  ?     The  additional  officers  ? 

16.  What  are  the  duties  of  the  secretary  ?     How  is  he  sometimes  relieved  of  a  part  of  his  duties  ? 

17.  What  rehition  does  the  treasurer  sustain  to  the  corporation  ?     Explain  his  duties  (i)  in  small  corpora- 
tions, and  (2)  in  large  corporations. 

iS.    Is  there  a  system  of  bookkeeping  peculiar  to  corporations  ?     Give  a  reason  for  your  answer, 
ig.    Wliat  books  are  peculiar  to  corporations,  and  for  what  purposes  are  they  used  ? 

20.  What  accounts  are  peculiar  to  corporations,  and  what  accounts  do  they  take  the  pl.ace  of  in  proprietarv 
and  partnership  businesses  .' 

21.  What  is  meant  by  "good  will."  and  how  is  its  value  determined  ?     How  is  it  treated  on  the  books  ? 
How  may  it  be  disposed  of  on  the  books  ? 

22.  When  a  going  business  is  transferred  to  a  corporation,  what  are  the  names  of  some  of  the  new  accounts 
which  will  be  constructed  ? 

23.  Explain  the  steps  to  be  taken,  and  the  entries  to  be  made,  when  a  going  business  is  transferred  to  a  cor- 
poration, and  a  new  set  of  books  is  opened. 

24.  What  entries,  when  the  old  books  arc  continued  ? 

25.  What  entries  would  be  made  when  stock  is  donated  to  the  company  and  afterwards  sold  for  cash  ? 
Explain  both  methods. 


MANUFACTURING 

Manufacturing  is  the  converting  of  materials  into  finished  products.  All  materials  in 
their  natural  or  raw  state  are  the  products  of  nature,  and  when  used  for  manufacturing 
purposes  are  called  "raw  materials."  Converted  materials  are  called  "manufactured  prod- 
ucts," or  "  finished  goods."  Things  which  are  called  finished  goods  in  some  industries  are 
classed  as  raw  materials  in  others. 

Production.  —  Production  is  of  two  kinds,  natural  and  industrial.  Originally,  industrial 
production,  or  manufacturing,  was  done  almost  entirely  by  handicraft,  but  now  machinery 
has  largely  supplanted  hand  work  in  many  of  the  operations.  The  substitution  of  me 
chanical  for  human  forces  in  manufacturing  results  generally  in  saving  of  labor,  increase 
of  output,  reduction  in  cost,  and  improvement  in  products. 

Disposition  of  Products.  —  Some  manufacturers  dispose  of  their  products  through  jobbers, 
commission  merchants,  or  manufacturers'  agents,  while  others  maintain  regular  sales  depart- 
ments, through  which  their  products  are  distributed  to  the  wholesale  trade.  Concerns  of  the 
latter  kind  are  both  manufacturers  and  wholesalers.  Still  other  manufacturers  dispose  of 
their  products  direct  to  the  consumers,  through  the  medium  of  retail  stores,  established  and 
conducted  as  a  part  of  their  business.  This  class  of  concerns  are  both  manufacturers  and 
retailers. 

The  Factory  System.  —  In  the  early  stages  of  industrial  production,  manufacturing  was 
carried  on  by  the  individual,  working  independently,  or  by  the  family  working  as  a  unit. 
Since  the  invention  of  machinery,  and  especially  of  the  steam  engine,  which  enlarged  the 
field  of  machine  operation,  the  old  systems  have  been  practically  superseded  by  the  "  factory 
system,"  which  combines  the  forces  of  labor,  machinery,  and  administration  into  definite  and 
effective  units.  The  factory  system  is  a  universal  method  of  industrial  production,  which 
can  be  applied  to  practically  all  kinds  of  manufacturing. 

Factory  Organization.  —  The  purpose  of  organization  is  to  increase  the  effectiveness  of 
action.  It  enables  a  number  of  persons  to  operate  more  effectively  as  a  concrete  unit  than 
they  could  as  independent  units.  It  jierniits  of  division  of  labor,  which,  in  industrial  opera- 
tions, results  in  increase  of  skill  and  of  productivity.  Division  of  labor  also  results  in 
specializing,  or  the  concentration  of  thought  and  effort  on  a  particular  thing,  thereby  greatly 
increasing  the  efficiency  of  the  operator. 

The  modern  factory  is  a  model  of  industrial  organization.  It  is  thoroughly  department- 
alized, and  every  department  is  so  operated  as  to  contribute  its  due  share  to  the  purpose  of 
the  factory,  and  to  the  success  of  the  business,  and  results  in  greater  efficiency,  increased 
output,  and  lower  costs. 

Factory  Efficiency. —  Efficiency,  as  applied  to  manufacturing,  is  based  on  a  comparison 
between  the  quantity  and  quality  of  output,  and  the  time,  labor,  and  money  expended  upon 
it ;  or  results  compared  with  costs.      Efficiency  is  obtained  by  saving  in  labor,  the  result  of 

271 


272  MODKRN    ILLLSTIvATIVK    BOOKKEEPING 

the  use  of  machinery;  by  saving  in  time,  the  result  of  the  division  of  labor;  by  proper 
organization  and  supervision  ;   and  by  other  improved  factory  methods. 

The. efficiency  of  the  human  agencies,  or  workmen,  is  dependent  generally  upon  their 
intelligence,  ability,  and  skill,  and  that  of  the  mechanical  agencies  is  dependent  generally 
upon  their  usefulness,  construction,  power  applied,  upkeep,  and  the  proper  service  of  the 
operatives.      Efficiency  is  also  dependent  upon  factory  conditions,  as  light,  air,  space,  etc. 

Manufacturing  Activities. — The  activities  of  a  manufacturer  comprise:  the  purchase 
and  use  of  materials,  machinery,  and  supplies;  the  application  of,  and  payment  for,  light, 
heat,  and  power ;  of  labor,  and  the  supervision  of  the  same ;  and  the  distribution  of  the 
finished  products.  For  these  activities,  and  the  expenditures  connected  with  them,  careful 
and  systematic  records  are  kept.  A  record  of  the  quantities  of  materials  purchased  and 
used,  received  and  delivered,  is  called  "stock  keeping,"  and  a  record  of  the  costs  for  pro- 
ducing the  finished  products  is  called  "cost  keeping." 

Manufacturing  Records.  —  The  records  of  a  manufacturing  business  relate  both  to  the 
production  of  the  commodities  and  to  the  distribution  of  the  same,  and  therefore  are  more 
comprehensive  than  are  the  records  of  any  of  the  other  kinds  of  business  heretofore  treated 
in  this  book.  Some  manufacturing  concerns  that  are  also  wholesaling  concerns  keep  one  set 
of  books,  or  records,  for  their  manufacturing  activities,  and  another  set  for  their  distributing 
or  selling  and  general  activities,  while  others  combine  the  records  of  all  classes  of  activities 
in  one  set.  When  two  sets  of  records  are  kept,  the  manufacturing  records  are  usually  sub- 
sidiarv  to  the  other  records,  or  regular  business  books. 

Manufacturing  Accounts.  —  The  distinctive  account  in  a  manufacturing  business  is  the 
Manufacturing  account,  which  shows  on  its  debit  side  the  cost  of  materials,  the  productive 
labor  cost,  and  the  manufacturing  e.\]ienses,  and  on  its  credit  side  the  productive  cost, or  the 
market  price  of  the  finished  products.  This  account  is  represented  b\'  its  subsidiary  ac- 
counts, Material.s,  Labor,  and  Manufacturing  Expenses,  or  the  subdivisions  of  the  latter 
account,  as  Indirect  Labor  account,  Rent  account,  etc. 

Other  accounts  peculiar  to  a  manufacturing  business  are  Machinery  and  Tools,  Repairs 
and  Renewals,  Patterns,  Patent  Rights,  Pay  Roll,  Finished  Products,  Depreciation,  and 
such  other  accounts,  real  or  nominal,  as  the  nature  of  the  business  may  require. 

Classifying  Expenses.  — The  expenses  of  a  manufacturing  business  may  be  classified 
under  three  heads,  manufacturing  expenses,  selling  e.xpenses,  and  general  and  administra- 
tive expenses ;  and  by  constructing  accounts  to  represent  these  three  classes  of  expenses 
much  time,  as  well  as  much  space  in  the  general  ledger,  can  be  saved.  The  trial  balance 
and  the  profit  and  loss  statement  are  simplified  by  this  classification,  and  can  be  more  easily 
and  quicklv  made  than  when  numerous  nominal  accounts  are  ke]5t. 

Analysis  Book.  — When  the  expenses  are  classified,  as  explained  above,  an  analysis  book 
is  kept.  This  book  contains  a  summary  by  months,  of  the  expenses,  classified  in  detail,  and 
is  compiled  from  analysis  sheets,  which  are  made  up  from  the  original  records.  In  this 
way  any  desired  information  regarding  the  expenses  of  the  business  can  be  readily  obtained. 

Purchases.  — When  materials  are  required  in  a  manufacturing  business,  this  is  indicated 
by  the  receipt  of  a  "  purchase  requisition  "  from  the  superintendent  of  the  factory,  or  of  a 
"stock  report"  from  the  stock  keeper.  An  order  called  a  "purchase  order"  is  then  sent 
to  the  producer  of,  or  dealer  in,  the  materials  wanted,  and  a  copy  of  the  order  is  sent  to  the 
accounting  department  to  be  filed  until  the  invoice  of  goods  is  received,  when  it  is  compared 


MAXUl-ACrURINU 


rs 


with  the  invoice  after  it  has  been  O.  K'cl  by  the  bookkeeper  from  the  stock  clerk's  report  of 
goods  received.  The  invoice  is  then  recorded,  and  both  purchase  order  and  invoice  are  filed 
either  separately  or  together.  A  copy  of  the  purchase  order  is  also  usuallv  sent  to  the  stock 
department  for  a  record  of  "stock  ordered."  (See  forms  of  purchase  order  and  duplicate 
below.) 

PuRCH.ASE  Okdkr  Blank. 


B''>I<'5(J 


Thi.Uu«r>ndN<.mbd 


ORDER 


.    C*n(r*  and  0__»_._ 

Blckfard  St*..    DOBtOn, 


To  M 


Send  us 

PRICE 

^■r  NO  tTTtNTiea 

To  THESE  COLUMN* 

(« 

QUANTrTY 

CLA«« 

OIL. 

(2) 

(3) 

(4) 

CB) 

(6) 

(Ji 

.... 

MAIL  INVOICE  SAME  DAY 
GOODS  ARE  SHIPPED. 


THOMAS  G.  PLANT  COMPANY. 


PuRCHAKiNo  Agent. 


H  ihera  are  jut  Inqulrlts  aboul  ths  aboTS  call  for  i 


a- 


Duplicate  Purchase  Order  Blank. 

Date  1911 


N9     S1056 


INVOICES    RECEIVED 

DAT(5 


Ship 

PRICE 

rMV,r: 

"vr" 

1 

o 

1 

2 

^/-v 

3 

w^ 

5 

/~N 

6 

u 

"""""""" 

O 

i 

Ack'cl 

Hum>d 
For  Bill 

(duplicate  of  order.) 

Acc*»lcd 

WiD.W 

D*1Wc»d 

Record  of  Invoices. — In  a  merchandising  business,  invoices  are  charged  to  Purchases 
account,  or  to  the  department  for  which  the  goods  were  bought.  In  a  manufacturing  busi- 
ness, invoices  are  dissected  and  the  items  distributed  to  various  accounts  representing  the 
purchases  for  which  the  transactions  were  made,  as  materials,  machinery,  tools,  supplies, 
etc.      In  like  manner,  the  bills  for  the  e.xpenditures  are  dissected,  and  the  items  distributed 


274  MOKERX   ILLUST1^\TIVE   BOOKKliEl'ING 

to  their  respective  accounts.  To  make  this  system  of  records  complete,  and  have  it  cover  all 
the  items  of  purchase  and  expense,  it  is  necessary  to  have  a  voucher  for  every  purchase  and 
cxi)enditure,  and  to  make  a  systematic  and  comprehensive  record  of  the  same;  and  this  is 
j)rovided  by  the  voucher  system  of  accounting. 

The  Voucher  System.  —  During  recent  years,  there  has  been  a  great  advance  in  the  sys- 
tematiziiiL?  of  accounts,  and  in  the  proper  distribution  of  the  various  items  of  expenditure; 
and  this  is  shown  in  its  highest  stage  of  development  in  the  voucher  system.  This  system 
requires  a  voucher  for  every  transaction  or  for  every  entrv  on  the  principal  books,  and  the 
use  of  a  "voucher  jacket  "  and  a  "  voucher  register." 

The  Voucher  Jacket.  —  A  voucher  jacket,  as  its  name  indicates,  is  a  jacket  or  cover  for 
the  voucher,  which  may  be  either  an  invoice  or  an  expense  bill.  The  face  of  the  jacket  is 
in  the  form  of  an  invoice  blank,  with  the  form  of  a  receipt  blank  below.  It  jjrovides  for  the 
number  of  the  jacket,  name  of  the  creditor,  date,  particulars,  and  amount  of  invoice,  signa- 
tures of  bookkeeper  and  manager,  and  for  the  acknowledgment  of  payment.  Several 
vouchers  from  the  same  creditor  or  several  expense  bills  may  be  included  in  one  jacket. 
(See  form,  page  275.)  The  back  contains  a  form  for  a  brief  record  of  the  voucher,  and  the 
proper  distribution  of  the  same,  which  includes  the  number  of  the  voucher,  name  of  creditor, 
amount  of  voucher,  when  ]iaid,  check  number,  and  accounts  to  be  charged. 

After  the  i)ro])er  records  have  been  made,  both  on  the  voucher  jacket  and  in  the  books, 
the  voucher  is  attached  to  the  jacket,  which  is  then  folded  with  the  back  out,  record  side  up, 
and  filed  under  "Unpaid  Jackets."  When  jjayment  of  the  voucher  is  made,  the  proper 
record  is  made  in  the  voucher  record  and  on  the  back  of  the  jacket,  which  is  then  sent 
wMth  the  remittance,  to  be  receipted  and  returned.  When  the  jacket  is  returned,  it  is  again 
fiied,  with  the  original  voucher  securely  attached  to  it,  under  "Paid  Jackets." 

In  sonif  voucher  systems  the  voucher  jacket  is  not  sent  out  with  the  remittance,  and  hence  does  not  contain 
the  receipt  blank. 

Many  business  houses  pay  all  invoices  received  from  the  first  to  the  tenth  of  the  month  on  the  tenth,  those 
received  from  the  tenth  to  the  twentieth  on  the  twentieth,  and  tliose  received  from  the  twentieth  to  the  end  of 
the  month  on  the  first  of  tlie  following  month,  and  regard  these  as  cash  payments :  and  their  creditors,  having 
been  notified  of  this  method  of  payment,  generally  do  not  object  to  receiving  such  payments  and  allowing  cash 
discounts. 

Vouch i:k  Check 


(Your  pl«c«  here-) 


t.N    r-fW,   P.WMENT  OP    VOfCHER  KO.    i.  C-Tv^ 


^,.^^^.^.,^.^^=^^^;f^ 


MANUFACTURING 


275 


Voucher  Jacket 

No.  2678  St.   Louis,   Mo.,  Dec.   1,    19l2. 

Gould  &  Lincoln 

Chicago,    111. 

in  account  luitij  THE   DARLINGTON    SHOE   CO. 


Nov. 

1 
20 
30 

Invoice 
<  < 

2^ 

net 
2/10 
2/10 

345 
400 

85 

85 
92 

275 
730 

85 

745 
14 

93 

1006 

78 

AI'FRi  VED  : 


ipz^^ 


'^^'^^^^^ 


^z-c-i^y^^^^ 


BOOKKEEPER. 


$1006tV''7 


TTTTT 


Chicago ,   111. , 


19  12 


lUffilirt)  of  THE    DARLINGTON    SHOE   CO. 
Ten  hundred  six  and  ^-^  Dollars 


!n  Full  for  Above  Account 


C\( 

I-H 

=  = 

f> 

H 

rH 
02 

o 

1— f 

, 

</5^ 

> 

^ 

C 

OUI 

rH 
O 

p 

t4-» 

n 

1  ^ 

O 

■H 

O 

1 

». 

^ 

JZ 

c« 

r" 

o 

o 
E 

^ 

3 

<u 

o 

tj3 

c 

-n 

00 

d 

c^ 

T, 

CD 

o 

C\2 

i; 

, 

o; 

o 

K 

Z 

C\2 

rH| 
O 


•a 
'5 

a. 


o 


(Please  receipt  and  return  promptly.) 

Rack  of  Voucher  Jacket 


03 


i     O 

2    o 


lO  '    tn 

CM  £-- 


P4 
•H 

a* 
W 

■d 

03 

c 

•H 

O 


o 

X 

B 

n 

3 

f> 

< 

n 

bi 

X 

v: 

V) 

S5 

tej 

0. 

« 

m 

tr. 

"A 

!r. 

y. 

^ 

X 

w 

L^ 

U 

c 

a 

< 

Q 

"^ 

y. 

/^ 

X 

o 

^ 


276 


MODERN   lI.I.USTkATIVE   E<:)OKKEEPlXG 


Voucher 
Distribution  of  Voucher  Jackets 


X 

'  VnicHEKs                     -^^•'■•>"<^-  ^^''"^ 

C 
> 

Credit 

1      . 

- 

■''"'■ 

General 

Accts. 
Rcc. 

:8iq 

19— 

, 

R   T.  Prince 

G/A  Sal.  70 

215265 

2820 

3 

I.  B.  Stone 

Inv.  1 2/ 1  (off.  sup.) 

=5>5 

2821 

5  1  A.  H.  Henrv 

Nov.  S.  200.  Exp.  139.52      339  32 

2S22 

12 

Brandt  Mfg.  Co. 

Inv.  12/10                              16450 

M"chv  &  Equip. 

16450 

2823 

'9 

Union  Leather  Co. 

••     12/14                              56219 

1 

2824 

21     Munn  &  Son 

"     12/20                                1365 

1 

2S2? 

25    Cox  Casting  Co. 

Bill  12/24  O.Frt.  1^-79       6742 

1 

1 18  75'' 

2S26 

27  '  I.  T.  Lvman 

••    12/26                             11875 

Real  Estate 

2827 

V 

Imprest  Fund 

Dec.  disb.                         >      8936 

V 

Accts.  Rec. 

250 

2828 

V 

Dodd  Leather  Co. 

Inv.  12/31                        1  13627s 

2829 

V 

L'nited  ShoeM'chyCo. 

Royalties  12/31                     30761 

2830 

^' 

A.  H.  Henry 

Dec.  S.  200.  Exp.  1 52.60       352  60  , 

-5556.5  1 

283  25j-«2'5o 

Payments  of  vouchers  are  made  by  voucher  checks,  and  if  a  jacket  is  not  returned  as 
requested,  the  check  is  a  receipt  for  the  payment  of  the  voucher.  (See  form  of  voucher 
check,  page  274.)  When  a  voucher  is  paid,  the  usual  entry  is  made  in  the  cash  book, 
with  the  exception  that  the  number  of  the  voucher  should  be  written  in  the  number 
column,  the  number  of  the  check  being  written  in  the  check  number  column.  (See  form, 
page  279.) 

Voucher  Register. — The  voucher  register  contains  a  record  of  all  vouchers,  and  is  the 
distinctive  book  of  the  voucher  system  of  accounts.  By  its  use  the  purchase  ledger  may  be 
dispensed  with  ;  the  total  amount  of  Vouchers  Payable  Credit  column,  as  shown  in  the  reg- 
ister, will  show  the  total  credits  to  be  carried  to  Accounts  Payable  account,  while  the  total 
amount  of  Vouchers  Payable  Debit  column  in  the  cash  book  will  show  the  debits  to  be  carried 
to  Accounts  Payable.  Of  course  the  amount  of  the  unpaid  items  in  the  Vouchers  Payable 
Credit  column  should  show  at  any  time  the  amount  of  vouchers  unpaid,  which  will  be  the 
accounts  payable  of  the  business,  and  these  can  be  readily  proved  by  comparing  with  the 
unpaid  vouchers  on  file.  The  voucher  register  is  provided  with  special  columns  for  the  num- 
bers and  particulars  of  the  vouchers,  and  for  the  distribution  of  the  amounts.  As  many 
columns  may  be  provided  for  distribution  purposes  as  the  nature  of  business,  or  the  classifi- 
cation of  the  accounts,  may  require.  .Accounts  for  which  no  special  columns  are  provided 
are  entered  under  ".Sundry  Debits."  The  vouchers  are  numbered  in  consecutive  order  in 
the  special  number  column.     (See  form,  jiages  276  and  277.) 

As  soon  as  an  invoice  or  an  expense  bill  has  been  O.K'd,  a  voucher  jacket  is  made  out 
and  certified  by  the  proper  persons,  after  which  the  distribution  of  the  amount  or  itLMiis  is 
made  to  the  proper  accounts  on  the  back  of  the  jacket,  and  from  this  the  distribution  is 
made  in  the  voucher  register. 

Some  accountants  do  not  record  the  voucher  jackets  until  llie  time  arrives  for  the  payment  of  the  vouchers. 

When  the  vouchers  for  the  month  have  been  recorded,  the  Vouchers  Payable  Credit 
column  and  the  special  distribution  columns  are  footed,  and  the  columns  ruled  off.     The 


MANUFACTURING 


277 


Register 

Month   of         December 


lO 


Paid 

Prime  Lost 

Manufactcrini;  Lxienses 

Sell.  Exps. 

G.    AND    A. 

Exps. 

Vmc 

Ck.  No. 

Materials   1 

i 

Freight 

Labor 

Factory 

Supplies 

Lasts  and 
Patterns 

Indirect 
Labor 

Miscella- 
neous 

MiscelU- 
neoiis 

Miscell.1- 
'       nenus 

Dec. 

I 

1307 

i876'5o 

206 

•5 

70 

3 

I318 

) 

25 

15 

5 

1324 

1 

1 

339 

52 

■9 

1332 

562 

•9 

21 

1340 

! 

1 

13 

65 

25 

•356      j 

48 

65 

1 

18 

77 

1 

31 

Imp.  Fd. 

46 

[8 

29 

■5 

It 

53 

13627s  1 

[ 

— 

-206 

3°7 

61 
7"9~ 

352 

:;74o 

60 

04 

v' 924,94 

^■48 

65 

^^i«76 

50 1 

r-n 

65 

•5 

'J  353 

«  106  68 

1 

i 

_ 

total  of  the  footing  of  the  Sundry  Debit.s  and  distribution  columns  should  agree  with 
the  footing  of  the  Vouchers  Payable  Credit  column.  The  footing  of  the  \'ouchers 
Payable  Credit  column  is  posted  to  the  credit  of  Accounts  Payable  in  the  general 
ledger.  The  items  in  the  Sundry  Debits  column  and  the  footings  of  the  various  dis- 
tribution coUmms,  excepting  the  General  column,  are  posted  to  their  respective  accounts 
in  the  general  ledger.  The  items  in  the  Miscellaneous  columns  are  analized  and  entered 
in  the  Analysis  Book.  A  check  mark  with  the  folio  of  the  account  written  over  it  should 
be  placed  opposite  the  footing  of  each  posted  column  to  indicate  that  the  amount  has  been 
posted. 

Cash  Book.  —  The  form  of  cash  book  used  in  a  manufacturing  business  is  essentially  the 
same  as  that  used  in  a  wholesale  business.  It  usually  contains  special  columns  which  adapt 
it  to  the  requirements  of  the  business. 

The  form  of  cash  book  shown  on  pages  278  and  279  is  well  adapted  to  any  manufacturing 
business  w^here  the  voucher  system  is  used.  It  provides  for  a  record  of  the  actual  receipts 
and  disbursements,  and  can  be  easily  and  quickly  audited. 

Imprest  Fund.  —  In  almost  every  business  it  is  necessary  to  have  some  ready  money  for 
various  purposes,  usually  of  a  petty  nature,  where  it  would  not  be  convenient  or  desirable  to 
issue  checks ;  and  where  it  is  the  practice  to  deposit  the  entire  cash  receipts  daily,  this 
ready  money  is  provided  by  creating  an  "imprest  fund."  A  check  is  drawn  for  the  esti- 
mated amount  of  money  that  will  be  required  for  petty  e.xpenses  for  a  given  period,  and 
cashed,  and  the  amount  is  charged  to  Imprest  Fund  account  through  the  general  cash  book. 

When  it  is  necessary  to  replenish  the  fund,  another  check  is  drawn  to  bring  the  fund  up 
to  the  original  amount.  In  making  up  the  balance  sheet,  the  balance  of  the  Imprest  Fund 
account  is  treated  as  cash  on  hand. 

Petty  Cash  Book.  —  The  currency  received  from  the  imprest  fund,  and  all  disbursements 
of  the  same,  are  entered  in  the  petty  cash  book,  and  the  entries  in  this  book  should  be  sup- 


y 


MODERN   ILLUSTRATIVE   liOOKKEEPING 


Cash 


l..»Tli 

AcCOtNT 

I'Ati  1   K   I    I.AK-. 

;£ 

Accounts 
Receivaiilb 

Cash  Salss ! 

Discount 

ON  Sales 

19- 

1 

Nov. 

I 

Balance 

in  E.xchange  Bank 

13942  26 

-> 

G.  H.  Deane  &  Co. 

inv.  10/20-2  7o 

7S6 

40 

"5     73 

770 

67 

3 

Sales 

L.  B.  Smith 

V 

132     60 

'32 

6o 

3 

El<;in  Tradinj^  Co. 

inv.  10/25-2% 

1268 

70 

25     37 

1243 

3j 

4 

Notes  Keqeivable 

Field  &  Co.  disc.  60  ds. 

X 

1500 

'^  , 

14S5 

4 

Sales 

Sherwood  &  Co. 

V 

194     89 

1 

1 

194 

89 

S 

Dodge  &  Pond 

inv.  10/26-2% 

942 

80 

iS    85 

923 

95 

s 

limpire  Shoe  Co. 

on  acct. 

500 

500 

6 

Marsh  &  Cox  Co. 

inv.  1 1 /(-net 

1988 

75 

1988 

75 

6 

Notes  Payable 
Sundries 

our  note  4  mo.  disc. 

X 

V 

4200 

I 

43     70 

4156 

30 

S700 

.Accounts  Kec. 

Cr. 

5486 

65 

Sales 

Discount  on  Sales 

Cr. 
Dr. 

327    49 

59    95 

Interest 

Dr. 

58    70 

?5337 

75 

J 

FoKM  OF  Stock  Ledger  Card 


ported  by  proper  vouchers.  At  the  end  of  the  month,  when  the  petty  cash  book  is  balanced, 
the  debit  entries  are  analyzed,  and  a  voucher  jacket  is  made  out  for  the  amount  of  the 
disbin-sements,  and  showing  the  distribution.  These  disbursements  are  then  passed  through 
the  voucher  record  in  the  usual  way,  and  a  journal  cnlrv  is  framed  debiting  Vouchers  Pay- 
able and  crediting  Imprest  Fund,  for  the  amount  of  the  voucher  jacket. 

Stock  Keeping.  — The  keeping  of  an  accurate  record  of  materials  is  of  special  importance 
in  a  manufacturing  business.  It  serves  to  show  not  only  the  quantities  received  and  used, 
but  also  the  quantities  which  should  be  on  hand  at  any  time.  Tills  not  onl\'  prevents  the 
necessity  of  taking  frequent  physical  inventories,  but  also  serves  as  a  basis  for  ordering 
stock,  keeping  up  stock,  and  for  otlier  purposes,  including  the  checking  or  proving  of  the 
physical  inventories,  thereby  detecting  waste  or  theft  of  material.     Such  a  record  is  called  a 

"perpetual      inven- 
tory." 

The  nature  of 
the  goods  manufac- 
tured will  determine 
somewhat  the  kind 
and  form  of  stock 
books,  or  of  stock 
records,  w  h  i  c  Ii 
should  be  kept  in 
any  particular  manu- 
facturing   business. 

The  stock  ledger  is  tlie  chief  book  in  any  stock  keeping  system.  It  contains  accounts  by 
quantities  with  every  kind  of  material  used  in  the  manufacture  of  the  finished  products.  The 
debits  of  these  accounts  are  made  from  the  invoices  after  they  have  been  checked  by  the 


Arltcle 

Location 

Unit 

Max. 

M;n. 

RECEIVED 

DELIVERED                                                              | 

Dile 

Ordered 

Received 

Date 

Quantity 

Balance        Date 

Quantity 

Balance  |   Dale 

Quanlily 

Balance 

L. 

_ 

,.^»J 

■  -""^ 

U"""'''^ 

"**— *'^— 1 

MANUFACTURING 


279 


Book 


Date 

In  Favor  of 

I'A„.:^L..AK_, 

0 

Check 

No. 

Vol-cm 
No. 

J'.VVAULE 

Disc.  ON 

PfRCHASES 

Net  Dis- 

DUKSEMENTS 

19— 

Nov. 

I 

Imprest  Fund 

R.  T.  Prince 

388 

100 

I 

Union  Leatlier  Co. 

inv.  10/2  net 

\/ 

389 

2749 

654 

3° 

654 

30 

I 

C.  B.  Tliomas  Co. 

Acct.  sale  and  exp. 

V 

39° 

2750 

576 

40 

2 

United  Slioe  M"cliv  Co. 

inv.  10/2  net 

V 

391 

27S3 

43' 

62 

43'  i  62 

3 

Banning  Poindings  Co. 

inv.  10/12-270 

V 

392 

2752 

276    21 

5 

52 

270 

69 

5 

R.  B.  Johnson  &  Co. 

inv.  10/13-2% 

si 

393 

2751 

1200 

60 

1 140 

5 

Dodd  Leather  Co. 

inv.  10/28-5%      . 

\f 

394 

2754 

1896 

75 

94 

84 

1801 

91 

5 

R.  T.  Prince 

Pav  roll 

V 

395 

2755 

3600 

.50 

5 

E.xcelsior  Thread  Co. 

inv.  10/3- 

V 

306 

2756 

64 

48 

64 

48 

6 

Coll.  and  E.xch. 
Accounts  Payable 
Discount  on  Purchases 

per  slip 

Dr. 
Cr. 

36 

5 

50 

4523 

160 

36 

8645 

40 

Balance 

in  Exchange  Bank 

16692 

35 

25337 

75 

receiving  department,  or  from  the  receiving  book  or  other  receiving  record,  and  the  credits 
are  made  from  the  requisition  slips  after  the  requisitions  have  been  filled  by  the  stock 
department,  or  from  the  stock  journal  or  other  record. 

The  card  ledger  form  of  record  is  admirably  adapted  for  use  with  any  stock  keeping 
system.     The  illustration  on  page  278  shows  a  common  form  of  stock  ledger  card. 

A  record  should  be  kept  of  factory  supplies,  and,  of  course,  of  finished  products.  The 
records  of  these  three  classes  of  stock  can  be  readily  distinguished  bv  the  use  of  different 
colored  cards.  ' 

For  storing  material  or  stock  so  that  it  can  be  easily  located,  and  conveniently  obtained 
when  wanted,  bins  are  generally  used.  The  bins  are  arranged  in  divisions  according  to  de- 
[lartments,  and  each  bin  bears  a  label  containing  the  number  of  the  bin,  and  the  name  of  the 
material  or  stock  for  which  it  is  used. 

Production  Methods. — There  are  two  general  methods  of  production  in  manufacturing, 
called  "the  production  order  method"  and  "the  process  method."  The  production  order 
method  is  used  where  the  natin-e  of  the  product  is  such  that  accurate  records  can  be  ke]3t  of 
each  article  or  lot  from  the  beginning  of  its  manufacture  until  it  becomes  a  finished  product. 
This  method  is  applicable  to  a  very  large  list  of  commodities.  The  process  method  is  used 
where  it  would  be  impossible  or  difficult  to  apply  the  production  order  method,  as  where  the 
workmen's  time  on  each  lot  cannot  be  definitely  reported. 

Cost  Keeping.  —  As  applied  to  manufacturing,  cost  keeping  is  a  systematic  record  of 
every  item  of  cost  connected  with  the  production  of  commodities.  The  principal  objects  of 
these  records  are  :  to  determine  the  actual  cost  of  each  article  or  lot  of  articles  manufactured, 
so  as  to  be  able  to  fi.v  a  selling  price  which  will  net  a  desired  profit,  or  to  show  the  profit 
when  the  selling  price  is  fixed  by  competition  or  other  causes;  to  ascertain  the  productivity 
and  efficiency  of  the  productive  agencies  ;   to  serve  as  a  guide  in  regulating  output  and 


280 


MODERN'   ILLUSTKATIVK   HoOKKKKPIXiJ 


DiAtiKAM  t)F  Cost  Findinc; 


expenditures ;    and  to  show  where  profits  may  be  increased  by  increase  in  efficiency,  f)r  by 
reduction  in  expenditures. 

There  are  numerous  cost  keeping,  or  cost  finding,  systems  applicable  to  the  various  lines 
of  business,  or  to  different  conditions  in  the  same  line.  Most  of  these  systems  are  the  results 
of  careful  study,  experiment,  and  experience.  The  best  cost  keeping  system  for  any  particu- 
lar business  is  the  one  which  will  give  the  desired  information  with  the  least  expenditure  of 
time,  effort,  and  moncv.  Cost  keeping  may  be  applied  to  almost  any  kind  of  business,  but 
it  is  especially  valuable  in  a  manufacturing  business. 

Elements  of  Cost.  — The  elements  of  cost  arc  :  prime  cost,  which  is  the  combined  cost  of 
materials  and  direct  labor;  factory  cost,  which  is  direct  factory  expense  added  to  the  prime 
cost;  total  cost,  which  includes  factory  cost,*general  expense,  and  selling  expense.  The 
selling  price  combines  all  of  the  above  elements,  and  the  profit. 

The  accomi)anying  diagram  illustrates  the  method  of  building  up  costs  to  find  a  selling 
price  which  will  net  a  desired  profit,  or  to  find  the  amount  of  the  profit  when  the  selling  price 

is  fixed  by  competition  or  other  causes.  In  the  lat- 
ter case  the  producer  gets  as  profit,  the  difference 
between  the  total  cost  of  the  article  and  the  price  at 
wliich  he  is  obliged  to  sell  it,  while  in  the  former 
case  he  gets  the  profit  he  desires  to  have. 

The  selling  price  represents  the  whole,  or  one 
hundred  per  cent,  and  each  of  the  parts  of  which 
it  is  composed  represents  such  a  percentage  of  the 
whole  as  the  cost  of  the  part  or  the  ratio  of  the 
profit,  bears  to  one  hundred  per  cent.  If  an  article 
which  is  priced  at  S5.4O  has  in  it  material  which 
cost  S  1.08,  and  the  other  costs  were  $  1.35  for  labor, 
97.2  cents  for  burden,  and  S  1.188  for  expense,  and 
the  profit  was  81  cents,  the  percentages  would  be  20, 
25,  18,  22,  and  IS  respectively. 

Production  Order. — Tiie  manufacture  of  goods  is  authorized  by  a  "  production  order," 
which  is  issued  by  the  office  to  the  factory,  and  which  contains  the  order  number,  date  of 
order,  description  of  the  articles  to  be  made,  the  quantity,  etc.  There  are  numerous  forms 
of  production  orders.  Those  generally  used  in  connection  with  cost  systems  are  designed 
to  contain,  in  addition  to  the  information  mentioned  above,  data  relating  to  quantity  and 
cost  of  material,  workmen's  time,  and  cost  of  operations.  Several  copies  of  the  jiroduction 
order  are  usually  made,  one  of  which  is  sent  to  the  cost  department. 

Material  Requisition.  —  The  materials  rec|uired  for  the  articles  called  for  in  the  produc- 
tion order  are  obtained  by  each  of  the  different  factory  departments  from  the  stock  depart- 
ment by  a  "  material  requisition  "  made  out  by  the  foreman.  This  requisition  contains  the 
date,  number  of  the  order,  name  or  number  of  the  department,  quantity  and  description  of 
materials  required,  signature  of  the  foreman,  or  person  who  authorized  the  requisition. 
After  the  stock  clerk  has  filled  and  recorded  the  requisition,  it  is  sent  to  the  cost  depart- 
ment. 

Labor  Ticket.  —  The  time  spent  bv  a  workman  u]>on  an  article  or  on  anv  part  of  the 
work  is  recorded  bv  him  on  a  labor  ticket,  or  time  card,  which  he  turns  in  to  the  foreman 


1  'i.'' 

SELLING  PRICE 
100% 

EXPENSE 

22,"- 

TOTAL  COST       -J 

...  ; :2^Ci 

^" . 

BURDEN 

1  .M ; ; 

fa;tory  cost  1   \ 
63JJ          1  J 

LABOR 

25r. 

PKIME  COST    :      . 

MATERIAL 

45'",' 

MANL'FACrUKIN(;  281 

when  he  has  finished  his  work.  There  are  man\-  forms  of  labor  tickets,  or  time  cards,  and 
the  form  used  in  any  business  will  depend  upon  the  information  required,  and  the  conditions 
under  which  the  goods  are  manufactured.  A  typical  labor  ticket,  or  time  card,  provides  for 
a  record  of  the  workman's  name,  or  number,  date,  article  or  part,  time  spent,  or  quantity 
made  if  piece  work,  rate,  amount,  and  foreman's  O.  K.  The  purposes  of  the  labor  ticket 
are  to  determine  the  cost  of  i)roductive  labor  anil  the  efficiency  of  the  workmen.  After 
the  labor  tickets  have  been  turned  in  and  recorded,  they  are  sent  to  the  cost  dei)artment. 

Pay  Roll.  —  A  record  of  the  total  amount  of  time  worked,  or  of  the  total  number  of 
pieces  done  by  each  workman,  and  the  amount  of  money  he  has  earned  is  kept  in  a  "  time 
book"  or  a  "piece  book."  There  are  numerous  forms  of  pay  rolls,  and  various  ways  of 
recordint;-  the  time  of  the  workmen.  In  factories  where  the  wages  are  paid  by  the  day  or 
the  week,  the  time  of  the  workmen  is  taken  either  by  time  keepers  or  by  means  of  me- 
chanical time  recorders.  The  time  keeper  records  daily  in  the  time  book,  the  time,  both 
morning  and  afternoon,  when  each  employee  enters  and  leaves  the  factory.  The  mechani- 
cal time  recorder  registers  automatically  on  a  strip  of  paper  or  on  a  card  the  "  in  "  and 
"  out  "  time  of  each  workman,  which  he  has  "  rung  up  "  by  means  of  a  key  or  lever  punch. 

The  pay  roll  is  made  up  from  the  time  book,  or  from  the  time  cards  or  time  slips  after 
they  have  been  removed  from  the  time  recorder,  and  also  from  the  piece  book. 

Division  of  Cost.  —  For  cost  keeping  purposes,  cost  has  been  divided  into  three  parts:  cost 
of  materials,  cost  of  labor,  and  indirect  expense  ;  also  called  overhead  charges  and  burden. 
The  cost  of  materials  is  found  through  the  material  requisitions,  and  the  cost  of  labor 
through  the  labor  tickets.  The  cost  e.xtensions  on  these  requisitions  and  tickets  are 
made  by  the  cost  clerks,  and  a  record  is  made  of  each  article  or  lot  on  a  "  cost  record  "  or  on 
a  "cost  ledger."  The  cost  record  shows  the  production  cost  of  each  article  manufactured, 
and  includes  the  cost  of  materials,  the  direct  or  productive  labor  cost,  and  the  indirect  ex- 
pense or  burden.  It  is  therefore  a  record  of  prime  cost  of  pi'oduction.  The  cost  ledger 
shows  the  productive  cost,  selling  cost,  and  the  general  and  administrative  expenses,  and  is  a 
complete  cost  record. 

Wage  Systems.  —  There  are  several  systems  or  plans  of  paying  wages,  among  the  most 
common  of  which  are,  the  day  rate  plan  and  the  piece  work  plan.  Others  are  the  preferen- 
tial, the  premium,  the  bonus,  and  the  profit-sharing  plans. 

The  day  rate  wage  plan  consists  of  paying  the  workman  a  certain  rate  per  day  or  per 
hour.  The  piece  work  plan  provides  for  paving  the  workman  for  the  exact  amount  of  work 
done  by  him,  measured  by  the  number  of  articles  or  parts  he  turns  out. 

The  other  wage  plans  are  too  comprehensive  for  proper  treatment  in  this  book. 

Burden. — The  indirect  factory  expense  or  burden  includes  the  salary  of  the  superin- 
tendent, wages  of  the  foremen  and  other  unproductive  or  indirect  labor,  cost  of  factory 
supplies,  rent,  light,  fuel,  and  power,  insurance,  maintenance  or  upkeep,  taxes,  depreciation, 
etc.  In  other  words,  burden  includes  every  expense  connected  with  the  production  of  an 
article  except  the  cost  of  materials  and  the  direct  labor  cost. 

The  indirect  expense  or  burden  cost  is  found  in  the  accounts  in  the  general  ledger.  The 
costs  of  materials,  and  of  direct  or  productive  labor,  are  found  separately  in  the  cost  ledger, 
and  collectively  in  the  general  ledger.  Separate  accounts  and  separate  pay  rolls  may  be 
kept  for  direct  and  indirect  labor,  or  only  one  account  and  one  payroll  maybe  kept  for  both; 
in  the  latter  case  it  would  be  necessary  to  analyze  the  account  or  pay  roll  to  find  the  two- 
labor  costs. 


282  MODERN   ILLUSTRATIVE   UOOKKEEPING 

Distributing  Burden.  —  When  the  cost  of  burden  has  been  found,  it  is  distributed  ever 
each  of  the  articles  manufactured  during  the  period  in  one  of  several  ways.  The  following 
are  some  of  the  methods  of  distributing  burden  most  commonly  used  in  connection  with 
modern  cost  systems  :  direct  labor  cost  method  ;  direct  labor  hour  method  ;  direct  labor  and 
material  method  ;  new  machinery  method  ;  new  pay  rate  method.  The  method  to  be  u.sed 
will  depend  upon  the  wage  system  under  which  the  factory  is  operated,  the  nature  of  the 
products,  and  other  factory  conditions. 

When  the  direct  labor  cost  method  of  distributing  burden  is  used,  the  ratio  is  found  bv 
dividing  the  total  burden  cost  by  the  total  labor  cost  for  any  given  period.  Thus  if  the 
total  burden  cost  for  a  month  is  $3000,  and  the  total  labor  cost  is  S6000,  the  ratio  of  burden 
is  509,',  and  this  percentage  is  added  as  burden  to  each  article  manufactured  during  that 
month.  Hence,  if  the  material  in  one  of  these  articles  cost  65  cents,  and  the  labor  on  it 
cost  95  cents,  the  prime  cost  would  be  S  1.60,  and  the  cost  of  burden  would  be  80  cents; 
the  cost  to  make  or  factory  cost  would  be  S2.40. 

The  direct  labor  hours  method  of  distributing  burden  is  based  on  workmen's  time  instead 
of  labor  cost,  the  hour  being  taken  as  the  unit  of  time.  The  rate  per  hour  is  found  by  divid- 
ing the  total  cost  of  burden  for  the  period  by  the  total  number  of  labor  hours,  and  the  per- 
centage thus  found  is  added  as  burden  to  the  prime  cost.  This  method  is  regarded  by  cost 
accountants  as  more  equitable  and  satisfactory  than  the  direct  labor  cost  method. 

By  the  direct  labor  and  material  method  the  total  cost  of  burden  is  divided  by  the  cost  of 
both  material  and  labor  for  the  period,  to  find  the  percentage  of  burden.  This  method  is 
practicable  only  when  the  material  forms  the  greater  part  of  the  prime  cost  of  the  article. 

The  student  is  referred  to  the  special  books  on  cost  keeping  for  a  further  explanation  of 
the  methods  of  distributing  burden,  their  treatment  here  being  necessarily  brief. 

Production  Reports.  —  When  the  finished  products  are  sent  to  the  stock  rooms,  or  to  the 
sales  department,  a  "  Production  Report  "  is  made  out,  which  shows  the  names  or  numbers 
of  the  goods,  the  quantities,  and  the  factory  cost.  From  this  report  an  entry  is  framed  in 
the  Finished  Stock  record,  or  purchase  journal,  debiting  Finished  Goods  and  crediting 
Materials,  Direct  Labor,  and  Manufacturing  Mxpenses.  The  Finished  Goods  account  cor- 
responds to  the  Purchases  account  in  a  mercantile  business. 

When  the  goods  turned  over  to  the  sales  dejartment  are  charged  to  Finished  Goods  account  at  market 
price  instead  of  at  factory  cost  price,  some  nominal  account  sliould  represent  the  difference  between  the  two 
prices  to  show  the  manufacturing  profit.  Some  accountants  use  the  general  Profit  and  Loss  account  for  this 
purpose,  while  others  construct  a  special  account. 

Goods  in  Process.  —  At  the  end  of  a  fiscal  period,  the  goods  in  process  of  manufacture 
are  inventoried  at  their  factory  cost,  and  this  is  found  in  the  same  way  as  for  the  finished 
products. 

SHOE    MANUFACTURING    BUSINESS 

Shoe  Manufacturing.  —  The  statements  of  principles  and  practices  heretofore  made  re- 
garding manufacturing,  and  the  forms  illustrated  therewith,  will  apply  to  almost  any  kind  of 
manufacturing  industry.  The  transactions  which  follow  are  especiallv  designed  to  illustrate 
the  application  of  these  principles  and  practices  to,  and  the  use  of  some  of  the  forms  in,  a 
shoe  manufacturing  business. 

The  shoe  business  was  selected  to  illustrate  modern  manufacturing  because  the  industry 
of  making  shoes  ranks  near  the  head  of  the  manufacturing  activities  of  the  United  States. 


MANXKACTURING  283 

This   typical  American  industry  employs  over  S200,ooo,cx)0  of  capital,  and  nearly  2CO,coo 
persons,  and  turns  out  over  250,000,000  pairs  of  shoes  a  year. 

Organization. — The  modern  shoe  factory  is  usually  organized  into  five  departments,  viz: 
Leather  Room,  where  the  soles  are  cut  and  heel  pieces  are  put  together;  Cutting  Room, 
where  uppers  and  linings  are  cut;  Fitting  Room,  where  uppers  are  made  (upper  parts  put 
together);  Bottoming  Room,  where  the  uppers  are  lasted,  the  soles  and  heels  put  on,  and 
the  shoes  finished  ;  Shipping  Room,  where  the  sock  linings  and  laces  are  put  in,  and  the 
shoes  are  ironed,  dressed,  inspected,  and  made  ready  for  shipment.  Each  room  is  under 
the  charge  of  a  foreman,  and  the  entire  factory  is  under  the  direction  of  a  superintendent. 

In  some  of  the  very  large  shoe  factories,  where  nearly  all  of  the  work  is  done  by  machinery,  the  organization 
of  the  factory  and  the  work  done  in  each  department  differ  somewhat  from  that  described  above. 

Materials.  —  In  the  manufacture  of  shoes,  leather  is  the  principal  material  used  for  the 
outside,  and  leather  and  cloth  for  the  inside.  Some  shoes  have  cloth  uppers,  and  leather  or 
rubber  outsoles.  Other  materials  which  enter  into  the  making  of  shoes  are  thread,  eyelets, 
buttons,  etc.,  and  are  called  "  findings." 

Lasts  and  Patterns.  —  For  the  shaping  and  making  of  shoes,  lasts  and  patterns  are  re- 
quired. Lasts  are  wooden  and  iron  forms,  known  as  "first  lasts,"  and  "second  lasts." 
First  lasts  are  the  exact  sizes  and  shapes  which  the  finished  shoes  will  be,  and  are  used 
when  the  uppers  are  being  attached  to  the  soles.  The  second  lasts  are  only  approximately 
the  sizes  and  shapes  of  the  finished  shoes,  and  are  used  in  the  supplementar\-  operations, 
after  the  shoes  have  been  lasted  ;  that  is,  after  the  uppers  have  been  sewed  to  the  soles. 

Patterns  are  used  for  cutting  uppers  and  linings.  This  cutting  is  done  by  hand  in  some 
factories,  and  by  machines  in  others.  When  machines  are  used  for  cutting,  dies  are  used 
instead  of  patterns.      Dies  are  also  used  for  cutting  insoles  and  outsoles. 

Production.  —  From  the  earliest  times  until  about  the  middle  of  the  nineteenth  century, 
foot  wear  was  made  entirely  by  hand,  with  the  aid  of  simple  tools,  such  as  lapstone,  ham- 
mer, awl,  and  pincers ;  but  during  recent  years,  the  ancient  wav  has  been  displaced  by  a 
system  of  machines  which  turn  out  perfect  shoes  by  the  hundred  in  the  time  it  took  the  old- 
style  workman  to  make  a  single  pair.  In  the  making  of  every  good  shoe  in  the  modern 
shoe  factory,  no  less  than  58  different  machines  are  used.  These  machines  are  of  the  most 
delicate  and  intricate  nature,  are  nearly  human  in  their  operation,  and  more  than  human 
in  the  accuracy  and  perfection  of  their  results. 

Shoes  are  made  by  several  processes,  and  in  various  styles,  sizes,  and  widths,  and  the 
customer's  order  indicates  what  is  wanted  in  these  respects.  Each  kind  and  style  of  shoe  is 
designated  by  a  name  and  a  number,  and  each  shoe  bears  the  factory  number  and  size  on  the 
top  lining. 

Each  lot  is  given  an  order  number,  and  this  number,  together  with  the  details  affecting 
the  preparation  of  the  shoe  upper,  are  written  on  tags  —  one  for  each  lot  of  shoes — which 
are  sent  to  the  foreman  of  the  cutting  room.  Others  containing  the  details  regarding  the 
sole  leather  are  sent  to  the  leather  room,  while  a  third  set  of  tags  is  sent  to  the  foreman  of 
the  bottoming  room.  On  the  back  of  each  set  of  tags  are  printed  the  names  of  the  different 
operations  covered  by  the  tag,  with  spaces  opposite  for  the  names  of  the  operatives  who  do 
the  work.  These  tags  are  production  orders ;  they  follow  the  shoes  from  one  department 
to  another ;  then,  after  being  checked,  they  are  sent  to  the  superintendent's  ofifice,  and  from 
there  to  the  cost  department,  and  finally  back  to  the  office  from  which  they  originated. 


284 


MODERN    ILLUSTRATI\E    BOOKKEEPING 


Shoe  Production  Oroer  Tag 


CO 

o 

Case  No.          '    Pa.i-                                   Description 

1 

Grade 

Qual   Wt 

H 

Pattern 

Foxing 

Perf. 

Fly.  Or. 
L.  S.Lin' 

Lace  Stay 
Perf. 

\  Butt.  Fly       Collar 

Tip 

Vamp 
Perf 

Back  Stay 

Laces 
Cartons 

Bows 

Lining 

Topband 

Eyelets 

Buttons  ,    Labels 

Emb's'ng 

St  No     I 
on  Lid 'g 

Sizes     1 

Bot.  St'p 

O 

Cutting  Instructions 

Fitting  Instructions 

Special  Instructions 

Pairs 

Width 

.        '^ 

2 

•i 

3 

^k 

4 

\% 

5 

',a 

6 

■i 

7 

'.i 

8 

'.i       9 

Entered 

1 

! 

o 

Last           Heel        i               Edge 

Sh  Dk  St  p  Fr.  St.  T  hd       Welt          Pimsh 

! 

Sole 

In-  ICoun      Sock 
sole     ter        Line 

Sp 

ecial 

For 

Wanted 

B.\CK  OF  Shoe  Production  Order  Tag 


S  B 


!=> 
O 


o 


c 
o 

to 

1-  -a 

•n*^ 

o 

>2    3 

o 

a> 

% 

>^  >i 

T3 

«   ... 

CS 

o..^ 

E 

c 

o  o 

(11 

o 

*-  =t 

xa 

p 

a*  0) 

i-J 

< 

S;  -a 

& 

•=  -1, 

c 

^ 

77^  't/3 

1-. 

o 

^  a 

u 

-t 

<u  a. 

a  o 

O) 

n 

"S  w 

u 

.rtS 

■«; 

C 

t.   ° 


>    H    «    ^ 


a. 
H 

o 
O 

o 

M 

■5 

g 

n 

o 

rs 

W 

to 

-a 

W 
u 

pa 

a 
o 

>v 
(t] 

> 

C 
fl 

s 

U 

01 

a: 

3 

f 

o 

g 

c 
'o. 
E 

> 
(0 

A. 
> 

e 

1 

1 
CO 

C 

1 

(0 

c 
o 

•a 

CO 

E 


ci     -a      4)     _ 
U    c    %=     c> 


^ 

4> 

c 

1 

H 

CO 

3 

s 

[^ 

E= 

CO 

c 

^ 

OJ 

k. 

S^ 

CO 

M 

.-    F 

s 

ej 

iJ 

H 

S 

CO 

C^ 

O 

•-] 

ES 

CO 

ffl 

^    »    E 

en     'C 

5  I: 


51 


Tlie  form  of  production  order,  or  shop  tags,  and  the  metli(Kl  of  (hstribiitins;  them,  vary  in  dilTerent  shoe  fac- 
tories, owing  to  the  (Hffeience  in  the  organization  of  tlie  factories,  and  in  the  grades  of  shoes  manufactured. 

In  some  factories  .sevcial  copies  of  the  production  order  which  are  printed  on  ordinary  paper,  are  fastened 
to  the  shop  tag,  or  complete  order,  tlie  back  only  of  which  contains  the  names  of  the  operations,  and  spaces 
for  the  names  of  the  operatives. 

The  production  particulars  are  typewritten  on  all  copies  of  the  order,  by  manifolding,  and  the  set  is  .sent  to 
the  superintendent  of  the  factory,  or  direct  to  the  leather  room,  if  there  is  no  superintendent. 

After  the  soles  and  heels  have  been  cut  but.  and  the  proper  records  have  been  made  on  the  back  of  the  tag, 
the  leatlier  order  is  detached,  and  the  remainder  ot  the  set  is  sent  to  the  cutting  room,  where  it  is  handled  in 
the  same  way,  after  which  the  remainder  of  the  set  is  sent  to  tlie  next  department,  and  so  on  until  the  lot  is 
finished.     The  shop  tag  is  sent  to  the  shipping  room,  or  packing  room,  with  the  finished  goods. 


MANUFACTURING 


28.5 


Processes. — There  are  three  general  processes  of  sewing  the  uppers  to  the  soles  of  the 
shoes  by  machines,  known  as  the  "McKay  Process,"  "Goodyear  Welt  Process,"  and  the 
"Goodyear  Turn  Process." 

By  the  McKay  Process,  stitches  are  passed  through  a  groove  or  channel  in  the  outsole, 
and  into  and  through  the  underlaps  of  the  upper  and  insole,  inside  the  shoe. 

By  the  Goodyear  Welt  Process,  which  is  similar  in  method  to  the  hand-sewed  process, 
the  sole  is  sewed  to  a  narrow  strip  of  leather  called  a  "  welt,"  which  has  been  previously 
sewed  along  the  edge  of  the  shoe,  beginning 
where  the  heel  is  placed,  and  ending  at  the 
same  point  on  the  opposite  edge.  By  this 
process  the  inside  of  the  shoe  is  left  smooth, 
as  the  stitches  are  on  the  outside,  instead  of  on 
the  inside,  as  in  the  ])rocess  previously  de- 
scribed. 

By  the  Turn  Process  the  sole  is  sewed  to 
the  upper,  with  both  parts  turned  inside  out, 
after  which  the  shoe  is  turned  right  side  out, 
and  finished.  As  there  is  no  inner  sole  in 
turned  shoes,  they  are  more  flexible  and  easier 
to  the  foot  than  are  shoes  made  by  the  other 
processes. 

Finished  Goods.  —  After  the  goods  are 
finished,  they  are  packed  in  cartons  (paper 
boxes),  properly  labeled,  one  pair  in  each  car- 
ton, and  the  filled  cartons  are  packed  in 
wooden  boxes,  or  cases,  and  shipped. 

In  this  work,  it  will  be  assumed  that  the  shoes  are  made  "  on  order,"  by  both  the  Good- 
year Welt  Process,  and  the  Turn  Process,  the  original  orders  being  taken  and  sent  in  by 
traveling  salesmen.  Duplicate  orders,  or  "  re-orders,"  are  sent  by  the  customers  direct  to 
the  house,  or  given  to  the  salesmen  when  they  call. 


.IP  OF  INSOLE. 


■...-■  COBRflLLlNa       UP  OF  INSOLE 

STITCM  UNITINO 
NiOLC  UPPCa  *»N0  WELT 


GENERAL    EXPLANATION 

Records. — Only  the  general  records  of  the  business  are  kept  in  the  accounting  depart- 
ment. All  orders  are  handled  by  the  sales  and  shipping  departments.  The  bill  and  charge 
system  is  in  operation  in  the  sales  department.  All  freight  shipments  are  made  under  the 
straight  bill  of  lading,  unless  otherwise  required,  and  all  bills  are  made  in  triplicate  on  billing 
machines,  the  original  bill  being  sent  to  the  customer,  the  duplicate  to  the  bookkeeper,  and 
the  triplicate  being  placed  in  the  sales  binder  for  reference. 

Books  Kept. — The  books  which  will  be  kept  in  this  business  are  journal,  general  ledger, 
sales  ledger,  general  cash  book,  petty  cash  book,  sales  journal,  voucher  register,  analysis 
book,  and  bill  book.  The  forms  of  these  books  are  illustrated,  or  are  the  same  as  hereto- 
fore used,  with  the  exception  of  the  journal,  which  has  two  debit  columns,  —  Xotes  Re- 
ceivable, and  General,  —  and  two  credit  columns,  —  General,  and  Accounts  Receivable. 

Distribution. — The  distribution  charges  in  the  voucher  register  will  be  made  in  accord- 
ance with  the  following  classifications: 


2S6  MODERN    ILI.USTR.VnVK   KOOKKKKPIN'G 

Real  Estate,  for  cost  of  all  permanent  improvements  made  on  the  land  and  buildings. 

Maintenance  of  Real  Estate,  for  cost  of  repairs  on  buildings. 

Macliinciy  and  Equipment,  for  cost  of  new  machinery  purchased,  borlers,  engines, 
motors,  inside  electric  wiring,  piping  for  heat  or  light,  belting,  etc.,  and  cost  of  setting  up  or 
installing  machinery  purchased,  and  for  cost  of  equipment. 

Tools,  for  cost  of  new  tools,  and  movable  articles  used  about  the  factory  in  connection 
with  production,  as  rollers,  trucks,  movable  scales,  time  recorders,  etc. 

Materials,  for  invoice  cost  of  all  materials  used  for  production  purposes,  as  leather  and 
findings. 

Freight  Imvard,  for  cost  of  freight  on  materials  purchased. 

Direct  Labor,  for  cost  of  productive  labor  on  goods  manufactured. 

Office  Equipment,  for  cost  of  safes,  desks,  chairs,  ty])ewriters,  billing  machines,  adding 
machines,  filing  cabinets,  letter  copying  devices,  time  recorders  other  than  those  purchased 
for  use  in  the  factory. 

Manufacturins;  Expenses,  for  cost  of  all  indirect  expenses  connected  with  production. 
Subsidiary  distribution  is  made  for  some  of  these  expenses  under  Factory  Supplies,  Lasts 
and  Patterns,  and  Indirect  Labor.  All  other  manufacturing  expense  items  are  entered  under 
Miscellaneous. 

Factory  Supplies,  for  cost  of  all  supplies  used  for  production  or  factory  purposes. 

Lasts  and  Patterns,  for  cost  of  lasts,  patterns,  and  dies. 

Lndirect  L^abor,  for  cost  of  superintendence  and  other  indirect  factory  labor,  as  salaries 
of  superintendent,  foremen,  and  wages  of  assistants,  clerks,  and  unskilled  laborers. 

Selling  Expenses,  for  cost  of  e.xpenses  connected  with  the  sales  of  the  goods.  These 
charges  are  distributed  under  Miscellaneous.  They  include  salesmen's  salaries  and  ex- 
penses, advertising,  circularizing,  jiostage  on  same,  shipping  department  wages  and  sup- 
plies, freight  outward,  insurance  and  taxes  on  finished  goods,  etc. 

General  and  Ailniiiiistrative  Expenses,  for  cost  of  administration  and  general  ex]5enses. 
These  items  are  distributed  under  Miscellaneous.  They  include  salaries  of  officers  and 
office  help,  office  e.xpenses,  office  supplies,  office  postage,  telephone  charges,  telegrams,  cor- 
poration ta.xes,  etc. 

PRELIMINARY   WORK 
Decembkk   I,    19 — 

The  W.  J.  Hilton  Shoe  Company  was  organized  as  a  business  corporation  Jan.  i,  1910, 
with  a  capital  stock  of  8200000,  par  value.  S  100  a  share,  of  which  S  180000  worth  has  been 
issued.  The  present  stockholders,  and  their  holdings,  are  as  follows:  \V.  J.  Hilton, 
S85000;  L.  M.  Hilton,  S40000;  K  C.  Wardner,  S35000;  (Teacher),  Sioooo;  K.  M. 
Merriam,  S9000;  (Student),  S  1000. 

The  president  of  the  corporation  is  W.  J.  Hilton  ;  vice  |)resident,  V..  C.  Wardner;  secre- 
tary, R.  H.  Merriam;  treasurer,  (Student) ;  manager,  (Teacher). 

The  members  of  the  board  of  directors  are  W.  J.  Hilton,  K.  M.  Hilton,  L.  C.  Wardner, 
(Teacher),  and  (Student). 

The  salary  of  the  president  is  S3000;  of  the  treasurer,  52400;  of  the  secretary,  $  1800; 
and  of  the  manager,  J>36oo. 

The  low  salaries  of  the  officers  are  due  to  their  large  lioldings  of  the  stock,  which  insures  their  getting  .1  pro- 
portionately large  share  of  the  profits  in  dividends.  If  much  of  the  .stock  were  held  by  outsiders,  these  salaries 
would  be  much  larger,  and  more  in  kecjjing  with  the  .services  rendered. 


MANUFACTURING 


287 


The  business  has  been  continued  since  its  organization,  and  is  at  present  in  active  opera- 
tion. For  the  purpose  of  giving  the  student  practice  in  malting  the  business  records  and  the 
statements  of  results  of  a  going  manufacturing  concern,  he  will  take  up  the  work  at  the 
beginning  of  the  last  month  of  a  fiscal  period,  and  continue  it  until  the  end  of  the  [leriod, 
making  the  records  in  his  own  set  of  books. 

The  trial  balance  taken  Nov.  30,  19 —  shows  the  following  balances  in  the  general 
ledger.  You  will  enter  these  balances,  e.xcept  cash,  in  your  general  ledger.  Allow  one- 
fourth  of  a  page  space  to  each  account.  Make  the  date  of  entry  Dec.  /,  ig —  and  write 
Balance  in  the  explanation  column. 


Trial  Balanxe,  November  30,    ig — ■ 
The  \V.  J.  Hilton  Ccmpanv 


Real  Estate, 

Machinery  and  Equipment, 

Tools, 

Lasts  and  Patterns, 

Office  Equipment, 

Good  Will, 

Materials, 

Goods  in  Process, 

Finished  Goods, 

Freight  Inward, 

Factory  Supplies, 

Accounts  Receivable, 

Notes  Receivable, 

Interest, 

Collection  and  Exchange, 

Cash, 

Capital  Stock, 

Reserve  for  Depreciation, 

Reserve  for  Bad  Debts, 

Accounts  Payable, 

Notes  Payable, 

Surplus, 

Sales, 

Returned  Purchases, 

Returned  Sales, 

Allowances  to  Customers, 

Discount  on  Sales, 

Direct  Labor, 

Manufacturing  Expenses, 

Indirect  Labor, 

Selling  Expenses, 

General  and  Administrative  Expenses, 

Discount  on  Purchases, 


73742.50 

55903-25 
4376.85 

12589.60 
3580.40 

30000. 
156163.65 

84 1 09. 20 

13416.60 
3339-32 
4951-53 

43996.47 
4895. 
126.70 
448.20 

22582.78 


2685.40 

362.75 

8491.14 

132440.60 

11463.47 

4580. 

22616.36 

10390.29 


I 80000. 

27951.75 
2895.10 
30629. 
13500. 
21893. 
422189.85 
1362.10 


6831.26 


707252.06    707252.06 


11463.47 

10468.70 

7906.60 

220O.75 

1033-40 

287.48 

223. IS 

496.28 

288  MODIiRN   ILLUSTRATIVE   KOOKKEEPING 

Enter  the  following  abstract  in  your  Analysis  Book,  extending  the  amounts  into  the  first 
money  column,  over  which  write  Jan.  to  Nov.  Leave  si.x  blank  lines  after  each  of  the  main 
divisions.     (See  Classifying  Expenses,  and  Analysis  Book,  page  272.) 

Abstract  of  Analysis  Book,  November  30,  19— 

Jan.  to  Nov. 
Manufacturing  E.xpenses: 

Fuel,  Light,  and  Power,  3547-50 

Repairs  and  Renewals,  1 125. 

Royalties.  6371.20 

Insurance  on  Machinery,  etc.,  203.25 

Taxes  on  Machinery,  Materials,  etc.,  216.52 

Selling  Expenses: 

Salesmen's  Salaries, 
Salesmen's  Expenses, 
Shipping  Department  Wages, 
Shipping  Department  Supplies, 
Insurance  on  Finished  Goods, 
Taxes  on  Finished  Goods, 
Freight  Outward, 

22616.36 
General  and  Administrative  Expenses: 

Office  Salaries,  6416.67 

Office  Help,  3542.85 

Office  Supplies,  185.40 

Insurance  on  Plant,  126. 

Taxes,  Corporation,  1 19.37 

10390.29 

Accounts  Receivable 

In  your  sales'  ledger  construct  accounts  with  each  of  the  following  concerns,  allowing 
one-fourth  page  to  each  account,  and  enter  on  the  proper  side  the  date,  terms,  and  amount 
due  from  each.  See  that  the  total  of  these  debit  footings  equals  the  amount  of  Accounts 
Receivable,  as  shown  in  your  general  ledger. 

The  accounts  receivable  arc  as  follows  : 

Hub  Shoe  Co.,  Boston,  Nov.  25,  net  30,  2    10,  2786.45 

Dodge  &  Rice,  Boston,  Aug.  4,  4  mos.,  4210. 

Pond  &  Eaton,  Boston,  Nov.  3,  net  30,  1782.45 

Providence  Boot  \-  Shoe  Co.,  Providence,  R.  I.,  Oct.  5,  net  60,  1242.50 

E.  F.  Woods  &  Co.,  Providence,  R.  I.,  Nov.  24,  net  30,  2   10,  1446. 

Sam  Stone  &  Co.,  Danbury,  Conn.,  Nov.  20,  net  30,  2    10,  798-50 

Geo.  H.  Deane  &  Co.,  Hartford,  Conn.,  Nov.  28,  net  30,  2/10,  1342-75 

New  Haven  Trading  Co..  New  Haven,  Conn.,  Nov.  27,  2/10,  2836.70 

E.  M.  Lyons  &  Co.,  New  Haven,  Conn.,  Oct.  30,  net  30,  628.50 

Bay  State  Shoe  Co.,  Worcester,  Mass.,  Nov.  25,  3   15,  3245.50 


MAN1.FACTUR1.\G  289 

Marsh,  Fieldiiij,'  Co.,  Chicago,  Nov.  lo,  2  30,  4697.50 

Quaker  Shoe  Co.,  Phihidelphia,  Nov.  15,  3  '30,  6255.75 

Hamilton,  l^rown  Shoe  Co.,  St.  Louis,  Mo.,  Oct.  5,  .sight  draft  60  ds.,  4875.20 

Pittsburg  Furnishing  Co.,  Pittsburg,  Pa.,  Nov.  20,  215,  4219.70 

Rich,  Lantz  &  Harris,  Cleveland,  O.,  Sept.  14,  90  ds.  net,  3628.97 

Unp.\td  Vouchers  —  Accounts  Payable 

In  your  envelope  marked  "Voucher  Jacket  File"  you  will  find  invoices  from  other 
persons  which  make  up  Vouchers  Payable,  as  shown  by  the  credit  side  of  Accounts 
Payable  account  in  the  general  ledger.  Remove  these  invoices  from  your  envelope 
and  prepare  a  voucher  jacket  for  each  invoice,  according  to  the  instructions  given  below. 
(See  form  of  voucher  jacket  and  back  of  same  on  page  275,  and  read  again  what  is  said  on 
page  274  regarding  the  voucher  jacket.  No  purchase  ledger  will  be  used  in  this  work,  as 
the  voucher  register  takes  the  place  of  that  book. 

No.  2780.  —  Invoice,  J.  Russell  &  Co.  Number  the  voucher  jacket,  but  do  not  date  it. 
You  will  be  instructed  to  do  that  later.  Next  write  the  name  and  address  of  the  creditor, 
date  of  the  invoice  (in  the  left-hand  date  column),  and  on  the  same  line  write  the  word 
Invoice,  the  terms,  and  the  amount.  Attest  the  correctness  of  the  record  on  the  jacket  bv 
writing  your  name  on  the  line  over  the  word  "Bookkeeper,"  and  have  your  teacher,  or 
whoever  he  may  designate,  sign  as  manager. 

An  analysis  of  the  invoice  shows  that  it  represents  a  purchase  of  machinery  and  equip- 
ment, amounting  to  S283.57,  of  tools,  $  3-75,  of  materials  for  use  on  addition  to  factory,  $6.88. 
These  and  the  other  facts  should  be  recorded  on  the  back  of  the  voucher  jacket.  Write  the 
number,  and  the  amount  of  the  voucher,  and  the  name  of  the  creditor  on  the  top  of  the  form, 
on  the  back  of  the  jacket.  Next  write  Machinery  and  Equipment,  $283.57,  on  the  first  blank 
line  under  Sundries,  Tools,  $3.75,  on  the  next  line,  and  Real  Estate,  $6.88  on  the  following 
line,  and  November  (current  year)  on  the  top  line.  You  have  now  completed  the  work  on 
the  voucher  jacket  for  the  present,  and  made  the  distribution  of  the  invoice. 

Pin  the  invoice  face  upward  on  the  front  of  the  voucher  jacket,  fold  the  same  and  place 
it  in  }'our  \'oucher  Jacket  File. 

No  entries  will  be  made  in  the  voucher  register  for  the  unpaid  vouchers  on  hand  at  this 
time,  as  they  represent  the  business  of  the  preceding  month,  at  which  time  proper  records 
were  made  on  the  books. 

No.  2781.  —  Invoice,  Bracket  Mfg.  Co.  This  shows  a  purchase  of  production  materials. 
Prepare  a  voucher  jacket  in  general  accordance  with  the  instructions  given  above. 

No.  2782.  —  Invoice,  Parry  Bros.  &  Co.  This  represents  a  purchase  of  materials  to  be 
used  in  enlarging  the  factory. 

No.    2783.  —Invoice,  Cutler  &  Porter.     Proceed  as  in  No.  2781. 

No.  2784.  —  Bill,  Frank  C.  Perkins.  Charge  the  full  amount  to  Machinery  and  Equip- 
ment under  Sundries. 

Nos.  2785,  2786,  2787,  2788.  — Invoices,  Collieson  Bros. ;  Cutler  &  Porter;  H.  M.  Scripple 
&  Co. ;  Collieson  Bros. 

When  in  doubt  about  the  distribution  of  an  invoice,  see  Distribution,  page  285. 

No.  2789.  —  Invoice  National  Brass  and  Iron  Works.  Charge  to  Office  Equipment  under 
Sundries. 


200  MODHkN    II.LfSTRATlVE    l;i  >i  iK  K  H  riNT. 

In  order  to  take  advantage  of  discounts  allowed  on  purciiases.  or  to  pay  invoices  promptly  when  due.  it  is 
customary  to  either  file  tlie  invoices  under  proper  dates,  usually  a  few  days  before  maturity,  in  ••  tickler  files."  or 
to  record  them  under  proper  dates  in  a  "tickler"  book.  A  tickler  file  has  numerous  comp.irtments,  numbered 
to  correspond  to  the  days  of  a  month,  with  the  name  of  the  month  on  the  outside.  The  tickler  is  usually  an 
ordinary  record  book,  the  months  and  days  being  written  in  it  as  required. 

Notes  Receivable 

In  your  envelope  marked  "  Cash  Drawer"  you  will  find  the  following  notes  which  consti- 
tute the  Notes  Receivable  balance  in  the  general  ledger: 

Nos.  233.  234,  235,  236.  Take  these  notes  from  your  envelo|)e  and  enter  thera  in  your 
bill  book,  after  which  return  them  to  the  envelope.  See  that  the  footing  of  the  amount  column 
in  your  bill  book  agrees  with  the  balance  of  the  Notes  Receivable  account  in  the  general 
ledger. 

Notes  Pavable 

The  following  notes  are  outstanding  and  constitute  the  Notes  Payable  balance  in  the 
general  ledger.  Enter  the  notes  in  your  bill  book,  and  see  that  the  total  agrees  with  the 
balance  of  the  Notes  Payable  account. 

No.  174.  — Date,  Nov.  i,  in  favor  of  E.  J.  Leonard,  for  mone\-  borrowed,  payable  at  your 
office  on  demand,  with  interest,  at  69,',  S5000. 

No.  175.  — Date,  Nov.  10,  in  favor  of  the  Commercial  Bank,  for  money  borrowed,  jiayable 
at  the  Commercial  Bank  in  30  days,  S3 500. 

No.  176.  —  Date,  Nov.  20,  in  favor  of  the  Commercial  Bank,  for  money  borrowed,  payable 
at  the  Commercial  liank  in  30  days,  S5000. 

No.  A  I.  -Enter  the  balance  of  cash,  which  is  the  balance  in  the  bank,  in  your  cash  book 
and  on  the  stub  of  your  check  book,  extending  the  amount  into  the  net  receipts  column  in 
the  cash  book  and  on  the  left  stub  of  the  check  book.  You  will  keep  the  debit  of  the 
account  with  the  bank  on  the  left  stub  of  your  check  book  in  this  work,  and  the  credit  of 
the  account  on  the  right  stub. 

TRANSACTIONS 
December  1,  19 — 

No.    1.  — Check.     Sam  Stone  &  Co.     Payment  of  invoice  of  November  20. 

linter  the  check  in  the  cash  book  crediting  Sam  Sfonc  &  Co.  for  the  full  amount  of  the  in- 
voice in  the  Account  Receivable  column,  and  debiting  Discount  on  Sales  in  the  special 
column  for  the  amount  of  the  discount.  E.xtend  the  amount  of  the  check  into  the  Net 
Receipts  column.  Ail  payments  bv  customers  who  discount  their  bills  will  be  handled  in 
this  manner  in  the  following  transactions;  and  in  every  case,  the  net  or  actual  amount  of 
cash  received,  will  be  entered  in  the  Net  Receipts  column,  as  well  as  in  the  other  column  to 
which  it  belongs. 

Some  of  tlie  larger  business  concerns  divide  the  general  cash  book  into  two  books,  one  of  which  is  called 
tlie  "credit  cash  book,"  and  is  used  for  a  record  of  the  receipts:  the  other  is  called  the  "debit  cash  book,"  and 
is  used  for  a  record  of  the  payments.  The  general  cash  book  or  books  are  kept  by  the  cashier  or  trea.surer.  but 
the  posting  is  done  by  the  bookkeepers.  This  is  called  an  "internal  check,"  and  provides  for  the  checking  of 
the  work  of  one  employee  by  another,  the  object  being  to  prevent  fraud  or  peculations  on  the  part  of  those  who 
handle  the  cash  of  the  concern. 

Post  daily  all  accounts  receivable  entries,  for  reasons  heretofore  explained. 


MANUFACTURING  201 

No.  2.  —  Regular  weekly  pay  roll.  This  i.s  made  up  by  the  superintendent  of  the  factory, 
and  by  the  secretary,  who  has  charge  of  the  office  force,  as  indicated  by  the  signatures. 

Prepare  a  voucher  jacket  No.  2790,  payable  to  R.  II.  Merriam.  Dale  it  both  at  top  and 
side  with  the  current  date,  and  write  Pay  Roll  in  the  explanation  column,  and  the  projier 
amount  in  the  outside  money  column.  Attest  the  jacket  and  have  it  api^roved  by  the  man- 
ager.    It  is  unnecessary  to  fill  out  the  receipt  form  at  the  bottom  of  the  jacket. 

Acting  as  treasurer  make  a  voucher  check  (see  form  on  page  274)  to  the  order  of  the 
secretary  for  the  amount  of  the  voucher.  Number  the  check,  and  write  on  it  the  number 
of  the  voucher  in  the  proper  place,  and  enter  it  in  the  cash  book.  (See  illustration  of 
cash  book  on  page  279.)  Be  sure  to  write  the  number  of  the  check  and  the  number  of 
the  voucher  in  their  respective  columns  in  the  cash  book,  and  to  extend  the  amount  into 
both  the  Vouchers  Payable  debit  column  and  the  Net  Disbursements  column.  Check  the 
eutr)-.     Place  the  check  in  "  Vouchers  for  Others." 

Fill  out  the  back  of  the  jacket  by  writing  the  number,  amount,  name  of  payee,  when 
paid,  and  number  of  the  check.  Charge  $^82S  to  Direct  Labor,  $83  to  Indirect  Labor,  and 
S  72  to  Salaries,  under  General  and  Administrative  Expenses. 

Next  enter  the  voucher  jacket  in  the  voucher  register  as  shown  in  the  illustration  on 
pages  276  and  277,  extending  the  total  amount  into  Vouchers  Payable  Cr.  column,  and  the 
amount  of  the  separate  items  into  the  proper  distribution  columns.  Write  G.  A.  Sal.,  $72  in 
the  Particulars  column,  which  will  assist  you  in  analyzing  the  miscellaneous  G.  and  A.  Exp. 
column  at  the  end  of  the  month.  Wiite  the  date,  and  the  number  of  the  check,  in  the 
proper  Paid  columns.  Ne.xt  write  the  current  month  and  year  at  the  top  of  the  back  of 
the  voucher  jacket,  to  show  that  it  has  been  recorded.  Pin  the  pay  roll  to  the  jacket,  fold 
the  same,  and  file  as  a  paid  voucher  in  the  Voucher  Jacket  file. 

Fo.  3.  —  Invoice,  J.  H.  Steele  &  Co.  For  office  supplies.  Prepare  a  voucher  jacket. 
Number  the  jacket  with  next  consecutive  nimiber,  and  as  treasurer  draw  a  voucher  check 
for  the  amount  of  the  bill,  and  enter  it  in  the  cash  book.  Write  the  name  of  the  creditor  in 
the  Name  column,  Invoice  12/1  net,  in  the  Particulars  column,  the  number  of  the  check,  and 
the  number  of  the  voucher,  in  their  respective  columns,  and  the  amount  in  the  Vouchers 
Payable  column  and  in  the  Net  Disbursements  column.  Check  the  entry,  since  it  will  not 
be  posted,  as  you  are  not  keeping  a  purchase  ledger.  All  payments  to  creditors  whose  in- 
voices we  discount  will  be  handled  in  this  way ;  in  every  case  the  actual  amount  paid  will  be 
entered  in  Net  Disbursements  coJumn,  as  well  as  in  the  other  column  to  which  it  belongs. 

Make  the  proper  record  on  the  back  of  the  jacket,  charging  the  purchase  to  Office 
Supplies  on  one  of  the  blank  lines  under  General  and  Administrative  Expenses. 

Record  the  jacket  in  the  Voucher  Register,  writing  lire.  12/1  {Off.  Sup.)  in  the  Particulars 
column,  and  the  amount  in  the  Miscellaneous  column,  under  General  and  Administrative 
Expenses.  This  column  will  be  analyzed  at  the  end  of  the  month,  and  the  explanations  in 
the  Particulars  column  will  identify  the  items. 

Complete  the  record  on  the  jacket,  after  which  proceed  with  it  as  heretofore  instructed. 

No.  4.  —  Duplicate  charge  bill.  Dodge  &  Rice.  Enter  in  the  sales  journal,  numbering 
the  entry  and  the  bill,  8975  and  charge  direct  to  the  account  in  the  sales  ledger  from  the 
bill.     Number  the  bills  consecutively. 

F.  0.  B. — The  abbreviation  F.  O.  B.  or  f.  o.  b.  means  free  on  board  ;  that  is,  the  goods  are  to  be  delivered 
either  free  to  the  transportation  company  at  the  place  of  sliipment,  or  free  of  cartage  and  transportation  charges 
to  the  place  of  destination,  depending  upon  the  agreement  of  the  parties  or  the  custom  in  the  trade,  and  tliis  is 
indicated  by  the  word  or  words  following  the  abbreviation. 


2ft2  MOUKUN  ii.ixsTK.vnvi:  huokkeeping 

In  the  above  cise  the  goods  are  to  be  (iclivereil  free  at  IJoston  :  that  is.  free  to  the  place  of  destination,  but 
the  delivery  does  not  include  cart.ige  from  tlie  freight  house  or  dock  of  the  transportation  company  to  the  ware- 
house or  store  of  the  purchaser. 

On  f.  o.  b.  receiving  point  shipments,  the  transportation  charges  are  usually  prepaid  by  tlie  sliipper.  but  if 
not  so  paid,  as  in  the  above  case,  they  are  paid  by  the  customer,  who  deducts  the  charges  from  the  invoice  at 
the  time  of  settlement,  sending  the  freight  expense  bill  with  his  remittance. 

No.  5.  —  Pay  voucher  No.  2780. 

Take  voucher  jacket  No.  2780  from  the  Voucher  Jacket  File,  detach  it  from  the  invoice, 
date  it  at  the  top  (current  date),  deduct  the  discount,  and  draw  a  check  for  the  net  amount. 
Fill  out  the  receipt  blank,  excepting  the  date  and  signature,  and  attach  the  check  to  the 
jacket.  Complete  the  record  on  the  back  of  the  jacket,  and  make  the  proper  record  in  the 
cash  book.     Remember  to  check  the  entry  in  the  cash  book. 

Place  the  voucher  in  Vouchers  for  Others,  for  the  present. 

No.  6.  —  Draw  a  check,  favor  of  the  secretary,  R.  H.  Merriani,  for  S  50  for  petty  cash 
uses.  Charge  Inif'irst  Fund  in  the  general  cash  book,  and  extend  the  amount  into  the  Net 
Disbursements  column.  Remember  to  write  the  number  of  the  check  in  the  Check  Num- 
ber column,  and  the  date  in  the  Date  column.  (.See  explanation  of  Imprest  Fund,  page  277, 
and  illustration  of  entry  on  page  279.) 

You  will  assume  that  Mr.  Merriam  has  had  the  check  cashed  and  has  turned  in  the  cur- 
rency. You  will  not  be  required  to  handle  the  petty  cash  in  this  work,  but  will  make  the 
records  in  the  petty  cash  book.  Enter  the  amount  in  the  left-hand  money  column  of  the 
Petty  Cash  Book,  writing  for  explanation,  Rccd  front  Iiitprcst  Fund. 

The  petty  cash  book  is  usually  kept  by  the  cashier's  assistant,  but  it  may  be  kcjjt  by  another,  and  there  may 
be  more  than  one  such  book  in  use.  Of  course,  the  person  in  charge  of  the  petty  cash  book  would  handle  tlie 
cash  and  make  the  payments,  which  should  be  supported  by  proper  vouchers. 

December  3 

Nos.  7,  8.  —  Duplicate  charge  bills,  Hamilton,  Brown  Shoe  Co. ;  E.  E.  Woods  &  Co. 
(See  No.  4.) 

Remember  to  post  all  charge  sales  direct  from  the  bills,  as  soon  as  the  bills  are  received 
and  entered  in  the  sales  journal,  and  to  post  daily  all  credits  to  customers,  so  that  the  ac- 
counts will  show  tiieir  true  current  condition.     Also  to  keep  the  cash  book  posted  to  date. 

No.  9. — .Memorandum,  J.  VV.  Evans,  salary  and  expenses  for  November.  Prepare  a 
voucher  jacket,  draw  a  check,  and  make  the  proper  entry  in  the  cash  book,  extending  the 
amount  into  the  Net  Disbursements  column.  Check  the  entry.  Under  Selling  Expenses  on 
back  of  the  jacket,  charge  $350  to  Salesmen's  Salaries  and  $241.2^  to  Salesmen's  Expenses. 
Record  the  voucher  in  the  Voucher  Register,  writing  A^cv.  Sn/.  S  Jjo,  £.i-/>.  $  24/. 2-,  in  the 
Particulars  column,  extending  the  full  amount  under  Selling  Expenses. 

Remember  to  enter  the  date  and  number  of  the  check  in  the  Date  column  when  a 
voucher  is  paid,  and  complete  and  file  the  voucher  jacket  in  Vouchers  Jacket  File. 

No.  10.  — Memorandum,  J.  L.  Marcy,  salary  and  expenses  for  November.  Proceed  as 
in  No.  9. 

The  above  expense  bills  are  properly  chargeable  to  the  November  business,  but  excepting  for  cost  keeping, 
and  other  statistical  purposes,  there  is  no  objection  to  charging  them  to  the  December  business,  since  they  will 
in  either  case  be  included  in  the  expenses  of  the  current  fiscal  pericml.  Some  accountants  do  not  dose  tiie 
voucher  register  until  all  bills  for  the  month  have  been  recorded. 

No.  11.  —  Invoice,  Frank  C.  Perkins.     Charge  to  Machinery  and  I-xiuipment. 


MANUFACTURING  293 

Nos.  12,  13. —  Bill,  City  Gas  and  Electric  Co.  Invoice,  E.  A.  Conway  Coal  Co.  Charge 
each  to  Manufacturing  E.xpenses  in  Miscellaneous  column  and  place  the  initials  F.  L.  &■  P. 
in  the  Particulars  column. 

No.  14.    Invoice,  Western  Leather  Co. 

No.  15.  —  Pay  vouchers  Nos.  2795,  2796,  2781,  27S5.  Deduct  the  discount  from  the  gas- 
bill. 

No.  16.  —  Petty  cash  memorandum.  Enter  each  item  in  your  petty  cash  book,  extending 
the  amount  into  the  right-hand  money  column.  Make  proper  explanation  of  each  entry. 
(See  No.  6.) 

No.  17.  —  Check,  Pond  &  Eaton.     See  their  account  in  your  ledger  and  enter  accordingly. 

No.  18.  —  Deposit  all  checks  on  hand,  and  indorse  the  note  of  the  Providence  Boot  & 
Shoe  Co.  and  leave  it  at  the  bank  for  collection.  Make  the  proper  record  in  your  bill  book. 
Collection  charges,  S2.50. 

Some  banks  request  that  items  for  collection  be  accompanied  by  a  list,  and  left  10  days  before  maturity. 
Before  making  a  deposit,  the  cash  should  be  proved.     If  your  cash  does  not  prove  at  any  time  and  vou  are 
unable  to  find  the  cause  of  the  "  over,"'  or  •■  short,"  adjust  the  same,  as  heretofore  explained. 

Make  the  entry  in  detail  in  the  check  book  for  the  deposit,  but  do  not  enter  the  collection 
in  the  cash  book.  Instead,  prepare  a  "  Collection  and  Exchange  "  slip,  and  enter  on  it  the 
amoujit  of  the  collection,  together  with  the  date.  Place  the  slip  in  the  cash  drawer.  Enter 
all  collection  charges  for  the  month  on  the  slip,  and  add  the  amount  to  the  disbursements 
when  proving  your  cash  during  the  month.      Enter  the  total  in  cash  book  at  end  of  month. 

By  keeping  a  Collection  and  E.xchange  slip,  it  is  unnecessary  to  enter  collection  and  exchange  items  in  the 
cash  book  until  the  end  of  the  month,  when  tlie  total  of  the  slip  will  be  entered  as  one  item,  at  which  time  tlie 
slip  will  be  filed  as  a  voucher  for  auditing  purposes. 

December  4 
No.  19.  —  Invoice,  J.  Russell  &  Co.    Pay  this  bill.    Charge  the  waste  to  Factory  Supplies. 
No.  20. —  Duplicate  charge  bill,  Marsh,  Fielding  Co. 

Freight  Prepaid.  —  The  prepayment  of  transportation  charges  is  usually  a  matter  of  agreement  between 
purchaser  and  seller,  but  it  is  sometimes  a  custom  in  the  trade,  or  a  necessity,  as  in  cases  where  there  are  no 
freight  or  express  agents  at  the  delivery  points.  Freight  charges  may  be  prepaid  as  the  result  of  agreement  or 
custom,  or  as  an  accommodation  to  the  purchaser.  In  the  first  case,  they  are  charged  to  Selling  Expenses, 
usually  through  a  special  Freight  Paid-Expense  account,  or  a  general  Freight  Outward  account,  which  is 
analyzed  at  the  end  of  each  month.     In  the  latter  case  they  are  charged  to  the  customer. 

The  prepayment  of  transportation,  and  the  disposition  to  be  made  of  the  charges,  are  indicated  on  the  sliip- 
ping  order;  as.  "  Freight  Paid-Expense,"  ••  Express  Paid-Expense,"  or  ••  Freight  Paid  and  Charge,"  or  "  E.\press 
Paid  and  Charge,"  or  by  other  definite  similar  expressions. 

December  5 

No.  21.  —  Check,  Providence  Boot  &  Shoe  Co.  See  their  account  and  apply  tlie  pav- 
ment  accordingly. 

No.  22. — The  bank  notifies  you  that  the  sight  draft  on  the  Hamilton,  Brown  ShoeCo., 
St.  Louis,  for  S4875.20,  which  was  drawn  Nov.  27,  has  been  paid,  and  the  amount  placed 
to  your  credit,  less  collection,  S5.25.  Make  the  proper  entry  in  the  cash  book  for  the  sight 
draft,  extending  the  amount  into  the  Accounts  Receivable  and  Net  Cash  Received  columns, 
and  in  the  check  book  for  the  credit ;  also  on  the  Collection  and  Exchange  slip  for  the 
collection.  Show  in  the  check  book  the  total  amount  of  the  draft,  and  the  collection,  as 
well  as  the  net  amount,  so  that  the  entry  can  be  easily  audited. 


294  MODERN   ILLUSTRATIVE   ISi  lOK KEEPING 

Nos.  23,  24.  —  Duplicate  charge  bill,  Dodge  &  Rice.     Pay  vouchers  Xos.  2788,  2789. 

No.  25.  —  Invoice,  Charles  Koss  &  Bro.  Charge  Shipping  Supplies,  in  Miscellaneous 
column  under  Selling  Expenses,  and  explain  in  Particulars  column. 

No.  26.  —  Statement,  United  Shoe  Machinery  Co.  Pay  the  amount.  Charge  Royalties, 
under  Manufacturing  Expenses. 

The  Royalty  System.  —  .Most  of  the  machines  used  in  the  "  Bottoming  Room."  instead  of  being  bouglit 
outright,  ,is  are  most  of  tlie  machines  in  the  "  Fitting  Room."  are  lea.sed  from  the  manul'acturers.  who  charge  a 
certain  sum  per  shoe  for  the  use  of  each  machine.  This  charge  is  called  a  -royalty."  and  ranges  from  ;  of  a 
cent  to  6  cents  on  a  shoe.  Manufacturers  of  leased  machines  keep  them  in  repair,  and.  of  course,  bear  any  loss 
by  depreciation. 

By  the  royalty  system,  the  shoe  manufacturer  has  the  use  of  the  leased  m.-ichines  without  having  any  of  his 
capital  invested  in  them,  and  has  no  charges  to  pay  for  repairs,  nor  allowances  to  make  lor  depreciation. 

Each  leased  machine  has  a  device  attached  to  it  for  registering  the  numljer  of  shoes  on  wliich  the  machine 
has  operated,  and  from  this  register  the  royalty  record  of  the  machine  is  made. 

No.  27.  —  Invoice,  A.  D.  Jackson  Saddlery  Co.     Pay  this  invoice  less  discount. 

December  6 
No.  28.  —  Invoice,  Parry  Bros.  &  Co.    This  material  is  for  use  in  enlarging  the  factory. 
Nos.  29.  30.  —  Invoice,  Cutler  &  Porter.     Duplicate  charge  bill,  George  H.  Deane  &  Co. 
No.  31.    -Cash  sale,  J.  T.  Ferris.     Enter  in  the  cash  book  only,  extending  the  amount 
into  the  Cash  Sales  and  Net  Receipts  columns.     Check  the  entry.     (See  page  27S.) 
No.  32.  —  Petty  cash  memorandum.     (See  No.  16.) 

December  7 
No.  33.  —  Invoice,  F.  A.  Walsh  &  Co.     (Be  careful  about  the  distribution.) 
Nos.  34,  35. —  Duplicate  charge  bills.  Rich,  Lantz  &  Harris;  New  Haven  Trading  Co. 
The  freight  charges  on  No.  34  were  prepaid  and  charged  to  the  customer,  as  shown 
liy  the  duplicate  charge  bill.      luUer  only  the  amount  of  the  sale  in  the  Item  column  of  the 
sales  journal,  and  on  the  ne.xt  line  write  Freight  oittzcunf,  on  above,  and  place  the  amount, 
5.36,  before  the  Item  column.     Carry  the  freight  outward  items  along  until  the  end  of  the 
month,  then  charge  the  amount  to  P"reight  Outward  account. 

Wlien  the  freight  charges  are  prepaid  at  tlie  time  tlie  goods  are  delivered  to  the  transportation  company, 
the  receipt  is  acknowledged  on  the  bill  of  lading,  and  memorandum  copy,  by  the  agent  or  cashier  of  the  com- 
pany. When  the  shipper  has  an  account  with  the  company,  he  stamps  "  To  be  Prepaid  and  diarized  to 
{shipper)  "  on  the  bill  of  lading,  to  the  right  of  the  description  of  articles,  etc.  (See  form  of  bill  of  lading. 
Appendi.x  II,  for  places  for  the  stamp,  and  the  receipt,  or  the  charge  notice.) 

In  this  business  The  City  Carting  Company  attends  to  all  freight  and  carting  matters, 
and  renders  monthly  statements.  The  signed  and  receipted  bills  of  lading,  and  memo- 
randum copies,  are  turned  in  by  them  to  the  shipping  department  daily. 

No.  36.  —  Letter,  check,  and  note,. Dodge  &  Rice. 

December  8 

No.  37.  —  Check,  The  Hub  Shoe  Co.     See  their  account. 

No.  38.  —  Draw  on  P2.  M.  Lyons  &  Co.  at  sight,  for  invoice  of  Oct.  30,  and  leave  the 
draft  at  the  bank  for  collection.  Deposit  all  cash  (currency  and  checks)  on  hand.  Bank 
charges  S5.50  for  collection.  Write  or  dictate  a  letter  to  E.  M.  Lyons  &  Co.,  notifying 
them  that  you  have  drawn  on  them  and  requesting  that  they  honor  the  draft. 


MANUFACTURING  295 

No.  39.  —  Pay  roll. 

No.  40.  —  Invoice,  Diebold  Safe  Co.      Pay  the  invoice. 

Nos.  41,  42.  —  Duplicate  charge  bill,  E.  F.  Woods  &  Co.  Cash  sale  (check),  \Vm.  M. 
Lee  &  Co. 

Nos.  43.  44.  —  Checks,  Pittsburgh  Furnishing  Co.;  New  Haven  Trading  Co.  Be  sure  to 
refer  to  the  account  in  the  ledger  before  entering  a  remittance. 

December  io 
Nos.  45,  46.  —  Invoices,  Western  Leather  Co. ;  Charles  Koss  &  Bro. 
No.  47.  —  Check,  Geo.  H.  Deane  &  Co. 

Nos.  48.  49.  —  Deposit  all  checks  on  hand;  collection  charges,  SS.25.     The  bank  notifies 
you  that  your  note  in  their  favor  for  S3SOO,  due  to-day,  has  been  charged  to  your  account. 
No.  50.  —  Pay  vouchers  Nos.  2794,  27S3,  2782,  2797. 

December  i  i 
Nos.  51,  52.  —  Invoice,  Collieson  Bros.      Duplicate  charge  bill.  Bay  State  Shoe  Co. 

December  12 
Nos.  53,  54.  —  Invoice,  O'Neil  Oil  &  Paint  Co.     Cash  sale,  Jones  &  Allis. 
No.  55.  —  Check,  Dodge  &  Rice.     Payment,  bill  Dec.  i,  less  freight  charges.     Treat  the 
deduction  from  the  bill  as  a  discount  on  sales. 

Other  ways  of  recording  a  deduction  of  this  kind  would  l)e  to  charge  it  to  Freight  Outwartl.  or  to  .-Mluwances 
to  Customers  through  the  journal.  By  any  of  these  ways,  however,  the  proper  deduction  t'rom  revenue  would 
be  shown  on  the  books. 

No.  56.  —  Note,  Providence  Boot  &  Shoe  Co.  and  protest,  petty  cash  memo. 

Charge  the  protest  fees  to  the  Providence  Boot  &  Shoe  Co.,  in  the  petty  cash  book. 

Post  the  entry.     No  entry  is  required  for  the  note  since  it  was  merely  left  for  collection. 

Make  proper  notation  in  the  bill  book. 

Write  or  dictate  a  letter  to  the  Providence  Boot  &  Shoe  Co.  requesting  an  explanation 
for  allowing  their  note  to  go  to  protest. 

No.  57.  —  Deposit  all  cash  on  hand.  Collection  charge,  $3.90.  Leave  the  note  of  Dodge 
&  Rice,  due  on  the  14th  inst.,  at  the  bank  for  collection. 

No.  58.  —  Pay  vouchers  Nos.  2784,  2799,  2810. 

December  13 
No.  59.  — Invoice,  A.  D.  Jackson  Saddlery  Co.      Pay  the  invoice. 
No.  60.  —  Duplicate  charge  bill,  Hamilton,  Brown  Shoe  Co.     The  terms  are  special. 
No.  61.  —  Letter,  check,  and  note.  Bay  State  Shoe  Co.     Enter  the  full  amount  of  the 
discount  in  the  cash  book. 

December  14 

No.  62. — Cash  sale,  Chas.  D.  Pomeroy. 
No.  63.  —  Pay  vouchers  Nos.  2S02,  2803. 

No.  64.  —  Check,  The  Hub  Shoe  Co.  Payment  of  note  as  per  bill  book.  Take  the  note 
from  your  Cash  Drawer,  write  "  Paid  "  across  the  face,  and  place  it  in  Vouchers  for  Others. 


296  MODERN   II.LL'STRATIVE   liOOKKEEPING 

No.  65.  —  Deposit  all  cash  on  hand,  and  leave  at  the  bank  for  collection  E.  F.  Woods  & 
Co.'s  note,  due  20th.  Collection  charge,  S4.  Have  the  Quaker  Shoe  Co.'s  note,  due  Jan. 
15,  discounted,  and  the  proceeds  placed  to  your  credit. 

Enter  the  face  of  the  note  in  the  Accounts  Receivable  Cr.  column,  the  amount  of  the  dis- 
count in  the  Discount  on  Sales  column,  and  the  proceeds  in  the  Net  Cash  Receipts  column, 
with  proper  explanations  to  support  the  records.  Place  a  cross  mark  in  the  folio  column  to 
indicate  the  special  amount.     (See  page  278.) 

In  this  work,  discount  on  notes  will  be  treated  as  interest,  and  will  be  charged  or  credited  to  Interest 
account.  The  amount  of  discount  in  each  case  will  be  entered  in  the  Discount  on  Sales  column  of  the  cash 
book  on  the  same  line  with  the  note,  and  a  cross  mark  will  be  placed  in  the  folio  column.  The  Discount 
columns  will  be  analyzed  at  the  end  of  the  month,  asd  the  proper  amounts  placed  as  footings  of  the  columns. 
The  Accounts  Receivable  column  will  be  analyzed  in  tlie  same  way.     (.See  cash  book,  page  27S.) 

This  manner  of  treating  discount  on  notes  permits  of  the  cash  book  showing,  in  the  Net  Receipts  and  Net 
Disbursemenjls  columns,  the  actual  cash  received  and  disbursed,  and,  therefore,  admits  of  rapid  and  easy 
auditing. 

December  15 
Nos.  66,  67,  68.  —  Invoice,  15.  S.  Green  &  Co.,  Pay  roll.     Duplicate  charge  bill,  Sam 
Stone  &  Co. 

Nos.  69,  70,  71,  72. —  Checks,  Rich,  Lantz  &  Harris;  E.  F.  Woods  &  Co.;  Marsh, 
I''ielclin<^  Co. ;   Hamilton,  Hrown  Shoe  Co. 

No.  73.  —  Pay  voucher  No.  2804. 

No.  74.  —  Pettv  cash  memorandum.  Your  draft  on  E.  M.  Lyons  &  Co.  was  protested  for 
nonpayment.     (Sec  No.  56.) 

December  17 

Nos.  75,  76,  77. —  Invoice,  H.  ]\I.  Sci]ile  &  Co.  (Machinery  and  Equipment.)  Dupli- 
cate charge  bill.  Pond  &  Eaton.     Check,  Dodge  &  Rice. 

No.  78.  —  Letter  and  check,  E.  M.  Lyons  &  Co. 

No.  78  fl.  —  Deposit  all  cash  on  hand;  collection  charges,  S  13.50. 

No.  79.  —  Letter,  Providence  Boot  &  Shoe  Co.  Acting  on  instructions  from  the  man- 
ager, you  will  write  or  dictate  a  letter  to  the  Providence  Boot  &  Shoe  Co.,  expressing 
regret  at  their  failure,  and  accepting  their  offer  of  60  cents  on  a  dollar,  for  your  book"  claim 
and  their  note  protested  on  the  12th  inst. 

December  18 
Nos.  80,  81.  —  Duplicate  charge  bill,  E.  B.  Lewis  &  Co.     Check,  Geo.  H.  Deane  &  Co. 
No.  82. — Pay  vouchers  Nos.  2807,  2808. 

December  19 
Nos.  83,  84. —  Invoice,  J.  H.  Steele  &  Co.     Invoice,  F.  A.  Walsh  &  Co. 
Nos.  85,  86,  87.  —  Duplicate   charge  bill,  Pittsburgh  Furnishing  Co.      Check,  Quaker 
Shoe  Co.     Petty  cash  memorandum. 

December  20 

Nos.  88.  89,  90.  —  Invoice,  Boston  Last  Co.  Cash  sale,  R.  S.  Sherwood  &  Co.  Duplicate 
charge  bill,  Bay  State  Shoe  Co. 

No.  91.  —  Letter  and  check  from  New  Haven  Trading  Co.  See  their  account  in  the 
ledger  for  the  terms.     Give  them  credit  for  S  1530. 


MANUFACTURING  297 

The  practice  in  cases  of  this  kind  varies.  Some  concerns  divide  the  remittance  Ijy  ioo%.  less  the  rate  of 
discount  allowed  by  the  terms,  and  credit  the  customer  for  the  amount  represented  by  the  quotient  (as, 
$1500  -4-  .98  =  $  1530.61)  ;  while  others  credit  the  customer  for  the  amount  of  the  remittance,  plus  the  discount 
on  the  same,  as  in  this  case.  The  latter  method,  owing  to  its  simplicity,  is  the  one  commonly  followed  in  many 
localities. 

No.  92.  —  Deposit  all  cash  on  hand.     Collection  charges,  $  8.90. 

No.  93.  —  Your  note  due  to-day,  favor  of  your  bank,  has  been  charged  to  your  account. 

December  21 

Nos.  94,  95,  96.  —  Invoice,  Western  Leather  Co.  Duplicate  charge  bill.  The  Hub  Shoe 
Co.     Check,  E.  F.  Woods  &  Co. 

December  22 
Nos.  97,  98.  —  Pay  roll.     Cash  sale,  Hudson  &  Foster. 

December  24 

Nos.  99,  100.  —  Invoice,  Chas.  Koss  &  Bro.     Duplicate  charge  bill,  Empire  Shoe  Co. 

No.  101.  —  Check,  Providence  Boot  &  Shoe  Co.  In  full  payment  of  the  bill  of  Oct.  5, 
and  their  note  protested  of  Dec.  12.  The  check  is  for  60  %  of  these  two  amounts,  as  per 
agreement. 

Enter  in  the  cash  book,  Providence  Boot  &  SJioc  Co.  for  60  ''/  of  bill,  and  Notes  Receiva- 
ble for  60  9/  of  note.  You  have  lost  40 ';,'  of  the  note,  and  40  ')',•  of  the  bill  of  Oct.  5  ;  also 
the  protest  fees.  Losses  from  bad  debts  are  provided  for  by  a  Reserve  for  Bad  Debts 
account,  which  is  credited  at  the  end  of  each  fiscal  period  with  a  certain  proportion  of  the 
profits  of  the  business,  and  charged  with  such  losses  as  may  occur  during  the  period. 
Therefore,  in  your  journal,  frame  an  entry,  Reserve  for  Bad  Debts,  for  the  total  loss,  and 
Providence  Boot  &  Shoe  Co.,  for  the  loss  on  the  book  account,  including  the  protest  fees, 
and  Bills  Receivable,  for  the  loss  on  the  note. 

No.  102.  —  Pay  vouchers  Nos.  2786,  2787,  and  2809. 

No.  103.  —  Deposit  all  cash  on  hand.  Collection,  $2.25.  The  note  of  E.  F.  Woods  & 
Co.,  which  was  left  for  collection,  has  been  i)aid,  and  the  amount  placed  to  your  credit. 

December  26 

Nos.  104,  105.  —  Invoice,  J.  Russell  &  Co.  The  nails  are  for  use  in  enlarging  the 
factory  ;  the  belting  is  an  addition  to  the  equipment.     Pay  the  bill.      Invoice,  Collieson  Bros. 

Nos.  106,  107,  108.  —  Duplicate  charge  bills,  The  John  Warner  Co. ;  Quaker  Shoe  Co.  ; 
Pittsburgh  Furnishing  Co. 

Nos.  109,  110,  111. —Checks,  E.  F.  Woods  &  Co.;  Sam  Stone  &  Co.;  Hamilton, 
Brown  Co. 

December  27 

Nos,  112,  113,  114. —  Invoice,  Cutler  &  Porter.  Duplicate  charge  bill,  Sam  Stone  &  Co. 
Check,  Rich,  Lantz  &  Harris. 

Nos.  115,  116.  —  Check,  New  Haven  Trading  Co.  In  payment  of  balance  of  invoice 
Dec.  7,  less  special  discount,  i  '/,_ .     Pay  voucher  No.  2816. 

December  28 

Nos.  117,  117  a. — Cash  sale,  B.  F.  Howe  &  Co.  Memo,  of  goods  returned,  The  Hub 
Shoe  Co. 


20S  MiiliKKN    U.l.lMKAIlVl;    !;<  >(  iKKEEriNG 

Nos.  118,  119.  —  Pay  voucher  No.  2815.  Deposit  all  cash  on  hand.  Collection 
charges,  S  8. 

December  29 

Nos.  120,  121,  122.  —  Pay  roll.  Duplicate  charge  bills,  E.  M.  Lyons  &  Co. ;  Rich,  Lantz 
&  Harris. 

No.  123.  —  Check,  Bay  Stata  Shoe  Co.  In  payment  of  invoice,  Dec  1 1.  Refer  to  their 
account,  and  see  if  the  remittance  is  correct. 

There  are  two  methods  of  treating  overpayment.  One  is  to  return  the  amount  of  the 
overpayment  by  check,  or  in  currency  if  the  amount  is  small,  and  the  other  is  to  credit  the 
customer's  account  for  the  amount  of  the  overpayment.  You  will  follow  the  second  method 
in  this  case. 

Frame  an  entry  in  the  cash  book  for  the  correct  net  amount  of  the  invoice,  and  for  the 
discount,  and  another  entry  for  the  overpayment,  with  proper  explanation.  Notify  the  cus- 
tomer (if  the  error,  and  state  how  j'ou  have  treated  it. 

Nos.  124,  125.  —  Pay  voucher  No.  2818.     Petty  cash  memo. 

December  31 

Nos.  126,  127.  128.  —  Duplicate  charge  bill.  Marsh,  P'ielding  Co.  Cash  sale,  W.  P.  Hoyt  & 
Co.      I'av  \-ouciier  No.  2820. 

No.  129.  —  Bill,  City  Carting  Co.  Pay  this  bill.  Charge  Freight  Inward,  S  243.52. 
Freight  Oittiuard,  $38.48. 

Nos.  130,  131, 132.  —  Memo,  goods  returned.  Empire  Shoe  Co.  Bill,  Mead,  Mason  &  Co., 
for  adilition  to  the  factory.     Pay  this  bill.      Deposit  all  cash  on  hand.     Collection,  S2.75. 

No.  133.  — The  salaries  of  the  officers  and  general  manager  for  the  month  are  due.  Pre- 
pare voucher  jackets,  and  draw  the  checks.  Charge  one-third  of  the  general  manager's 
salary  to  Mfg.  I^.xpenses. 

The  transactions  for  the  month,  and  also  for  the  fiscal  period,  are  now  completed,  but 
all  of  the  records  have  not  been  made.  It  usually  takes  a  few  days  in  which  to  get  the 
reports  from  the  different  departments,  showing  cost  of  goods  manufactured  during  the 
month,  and  of  goods  in  process,  the  value  of  finished  goods,  materials  and  factory  supplies 
on  hand,  the  amount  of  wages  and  salaries  accrued,  inventories  of  office  equipment  and 
office  supplies,  and  the  salary  and  expense  accounts  of  the  traveling  salesmen. 

In  the  meantime,  the  transactions  of  the  next  month  would  be  taking  place,  and  be 
recorded  in  the  books  of  original  entry.  In  this  work,  only  the  business  of  the  fiscal 
period  ending  December  31  will  be  considered,  anti  therefore  no  records  will  be  made  for 
the  transactions  of  the  next  period. 

You  will  now  pencil  foot  your  petty  cash  book,  and  analyze  the  entries,  preparatory  to 
transferring  them  to  the  voucher  register.  Rule  a  sheet  of  analysis  paper  with  four  col- 
unnis,  which  you  will  head,  Aeets.  Rev.,  Mfg.  Exp.,  Sell.  Exp.,  Gen.  &  Athn.  Exp.,  respec- 
tively, and  enter  in  these  columns  the  items  which  appear  in  the  petty  cash  book,  including 
the  personal  accounts  items.  Be  careful  about  the  classification  of  the  items,  and  when  in 
doubt,  refer  to  Distribution,  page  285. 

Next,  rule  off  and  foot  the  analysis  sheet,  after  which  enter  the  titles  of  the  accounts 
and  the  footings  of  the  columns  in  the  explanation  column  of  the  petty  cash  book,  writing 
Siniiiihvj  over  the  entry.     Single  rule  and  foot  the  summary  to  show  that  it  agrees  with 


MANUFACTURING 


299 


the  pencil  footing  of  the  disbursements  column.  Next  balance  and  rule  off  the  petty  cash 
book,  and  on  a  slip  of  paper  make  a  memorandum  of  the  summary  under  the  current  date. 
Pin  the  memorandum  to  the  petty  cash  vouchers,  and  prepare  a  voucher  jacket,  usin"',  for 
explanation.  Petty  cask  disbursements,  Decembei;  ig — ,  for  total  amount,  and  distributing 
according  to  the  summary. 

Enter  the  voucher  jacket  in  the  voucher  register  as  follows  :  After  writing  the  number 
and  the  date  in  the  proper  columns,  write  in  the  In  Favor  of  column  Lnprcst  Fund,  in  the 
Particulars  column,  Dec.  disbursements,  in  the  Vouchers  Payable  Cr.  column  ( Total  amount), 
in  the  Account  column,  Accojints  Receivable  {amount),  and  check  the  entry,  as  the  items  com- 
prising the  amount  have  already  been  posted,  and  the  amount  will  be  posted  in  the  footing 
of  the  special  column.  Extend  the  other  distribution  items  into  their  respective  columns, 
and  write  the  current  date  in  the  Paid  date  column,  and  Imp.  Fd.  in  the  check  number 
column. 

The  Imprest  Fund  has  been  charged,  through  the  general  cash  book,  for  the  check 
drawn  for  petty  cash  expenses,  and  it  should  now  be  credited  for  the  petty  cash  disburse- 
ments. The  Accounts  Payable  account  will  be  credited  through  the  voucher  register  for 
the  amount  of  the  petty  cash  disbursements,  which  are  not  Accounts  Payable  items,  hence 
an  entry  must  be  made  to  adjust  the  account.  You  will  therefore  frame  a  journal  entry  deb- 
iting Accounts  Payable  and  crediting  Imprest  Fund  for  the  amount  of  the  petty  cash  disburse- 
ments for  the  month,  with  the  proper  explanation.      Post  the  entry. 

Nos.  134,  135.  —  Memorandums,  J.  W.  Evans,  J.  C.  Marcy.  Prepare  voucher  jackets, 
and  enter.  These  expenses  are  to  be  charged  to  the  December  business,  but  as  the  reports 
are  received  after  the  close  of  the  month,  the  vouchers  will  be  paid  in  the  next  fiscal  period. 

Pencil  foot  the  voucher  register  and  prove  the  footing.  The  amount  of  the  Voucher 
Payable  Cr.  column  should  agree  with  the  total  of  all  the  other  columns.  Next  rule  and 
ink  foot  the  register. 

Rule  off  and  foot  the  sales  journal  and  post  the  footings  (see  No.  34).  Enter  in  the 
cash  book  the  amount  of  collection  and  exchange,  from  your  Collection  and  Exchange  slip. 
Foot  separately  the  regular  and  special  items  in  the  Accounts  Receivable  and  Discount  on 
Sales  columns  of  the  cash  book,  and  write  the  totals  and  titles,  as  shown  in  the  form  on 
page  278.     Balance  and  rule  off  the  cash  book,  and  post  the  footings. 

No.  136.  —  Statement,  Commercial  Bank.  Reconcile  the  bank  balance,  and  list  the  out- 
standing checks  on  the  stub  of  the  check  book. 

In  business,  the  canceled  checks  would  of  course  accompany  the  statement. 

Call  at  the  teacher's  desk  for  your  paid  jackets  and  canceled  checks,  if  they  have  not 
been  returned  to  you. 

Post  the  voucher  register  in  accordance  with  the  following  instructions :  First,  post  the 
footings  of  the  Vouchers  Payable  Cr.  column  to  the  credit  of  Accounts  Payable,  and  place 
a  check  mark,  with  the  folio  of  the  account  over  it,  opposite  the  amount.  Next  post  the 
unchecked  Sundry  Debits  entries.  (The  footing  of  the  General  column  is  not  posted  nor 
checked.)  Then  post  the  footings  of  the  remaining  columns  to  the  debit  of  their  respective 
accounts,  and  check  the  amounts. 

You  will  now  analyze  the  Miscellaneous  columns  of  the  voucher  register,  and  enter  the 
results  in  the  analysis  book.  Prepare  analysis  sheets  for  the  three  main  divisions  of  ex- 
penses.    Rule  as  many  money  columns  on  each  sheet  as  there  are  subsidiary  titles  in  your 


800  MODERN   ILLUSTRATIVE   B(X)KKEEriNG 

analysis  book,  and  leave  space  for  a  few  additional  columns.  (See  your  analysis  book.) 
Head  the  columns,  abbreviating  the  titles. 

Next  analyze  the  items  in  the  Miscellaneous  Manufacturing  Expenses  column  in  the 
voucher  register,  placing  the  amounts  in  the  proper  columns  on  the  Manufacturing  Expenses 
analysis  sheet.  Refer  to  the  Particulars  column  for  assistance  in  identifying  the  items, 
and  to  the  petty  cash  book  or  the  analysis  sheet  of  the  same.  Rule  and  head  additional 
columns  on  the  analysis  sheets  as  needed. 

Analyze  the  Selling  lixpenses  column  and  the  General  and  Administrative  Expenses 
column,  as  instructed  above.  Foot  and  prove  the  analysis  sheets.  The  total  of  the 
footings  of  each  sheet  should  agree  with  the  footing  of  the  corresponding  voucher  register 
column. 

Enter  the  footings  of  the  various  columns  of  the  analysis  sheets  in  the  second  or  Dec. 
column  of  the  analysis  book,  opposite  their  respective  titles,  writing  new  titles  if  necessarv. 
Pencil  foot  each  section  of  the  analysis  book,  and  compare  with  the  footing  in  the  voucher 
register.     If  correct,  rule  off  and  ink  foot  the  sections. 

No.  137.  —  In  accordance  with  the  established  policy  of  the  company,  you  will  charge  off 
depreciation  as  follows :  On  machinery  and  equipment,  and  tools,  1 2.1 '/,'  of  book  value  ;  on  lasts 
and  i^atterns,  25  /,'  ;  and  on  office  equijiment,  lO',,-  Find  these  amounts  from  the  accounts, 
and  frame  a  journal  entry,  charging  Reserve  for  Depreciation  for  the  total  dei)reciation,  and 
crediting  the  other  accounts  for  their  respective  amounts,  with  proper  explanation.  Post  the 
entry  and  write  Depreciation  for  explanation  of  the  items  in  the  ledger. 

It  is  a  common  practice  among  the  large  manufacturing  concerns  to  keep  separate  Reserve  for  Depreciation 
accounts,  as  Reserve  for  Depreciation  of  .Machinery  and  Equipment.  Reserve  for  Depreciation  of  Tools,  Re.scrve 
for  Depreciation  of  Buildings,  etc. 

Next  charge  off  10'/,  of  the  book  value  of  good  will,  debiting  Surplus.  Frame  and  post 
the  entry,  making  proper  explanation  in  the  account. 

No.  138.  —  The  wages  and  salaries  accrued,  but  not  due,  as  reported  by  the  superintendent 
and  the  secretary,  are  as  follows:  Direct  labor,  S676.50,  indirect  factory  labor,  S  112.50, 
shipping  department  wages,  537.50,  office  help,  S24. 

The  royalties  accrued,  but  not  due,  as  shown  by  the  registers  on  the  leased  machines, 
and  reported  by  the  superintendent,  amount  to  S312.45. 

Frame  a  journal  entry  charging  these  accruals  to  their  proper  accounts,  and  crediting 
Accrual  account  for  the  total.     Post  the  entry. 

Accrual  Account.  —  For  the  purpose  of  getting  all  accrued  but  not  due  assets  and  liabilities  on  the  books  at 
the  close  of  a  fiscal  period,  a  nominal  account,  called  .Accrual  account,  is  constmcted.  This  account  is  debited. 
when  constructed,  for  the  amount  of  all  accrued  assets,  and  credited  iar  the  accrued  liabilities.  When  the  books 
are  re-opened  for  the  next  fi.scal  period,  the  accruals  are  adjusted,  at  which  time  Accrual  account  is  credited  for 
accrued  a.ssets  and  debited  ior  accrued  liabilities,  which  will  balance  the  account. 

■  You  have  outstanding  an  interest-bearing  note.  Find  the  amount  of  the  accrued  interest, 
and  frame  the  proper  journal  entry.     Post  the  entry. 

Take  off  a  trial  balance  of  balances  of  the  general  ledger,  and  include  the  cash  balance. 

Make  an  abstract  of  the  sales  ledger,  and  see  if  it  is  in  agreement  with  the  Accounts 
Receivable  account. 

Make  an  abstract  of  \'ouchcrs  Payable  Cr.  from  the  voucher  register,  and  compare  it 
with  the  balance  of  the  Accounts  Payable  account,  and  with  the  unpaid  vouchers. 

The  following  inventories  have  been  reported  by  the  different  departments,  as  per 
schedules  on  file : 


maxl'iactl'ring  301 

Inventories,   December  31,   19 — 

Materials  per  schedule  #1  $  3428.60 

Factory  Supplies    "        #3  410.34 

Fuel                          "        #6                           .  468.10 

Goods  in  Process    "        #2  6172.15 

Shipping  Supplies"         #5  229.85 

Finished  Goods       "        #4  17600. 

Office  Supplies       "        #7  40.50 
Real  Estate  (at  book  value) 

You  will  now  make  statements  of  the  business  similar  to  those  made  for  the  Wholesale 
Dry  Goods  business,  e.xcepting  as  instructed  below. 

Manufacturing,  Trading,  Profit  and  Loss  Statement.  —  In  a  manufacturing  concern,  the 
statement  showing  the  activities  and  profits  and  losses  of  the  business  contains  a  section 
which  represents  the  Manufacturing  account,  called  the  Manufacturing  account  section,  and 
is  the  first  section  in  the  statement.     (See  form  on  pages  302  and  303.) 

This  account  shows,  on  the  debit  side,  the  items,  materials  on  hand  at  beginning  of  fiscal 
period,  purchases  of  materials  during  the  ])eriod,  freight  inward,  labor  paid  during  period, 
goods  in  process  at  beginning  of  period,  manufacturing  expenses  for  the  period,  factory  sup- 
pUes  on  hand  at  beginning  of  period,  purchases  of  factory  supplies  during  the  period,  and 
depreciation  of  machinery  and  equipment,  of  tools,  and  of  lasts  and  patterns,  from  the  total 
of  which  is  deducted  the  total  of  the  items,  materials,  goods  in  process,  fuel,  factory  supplies, 
on  hand  at  the  end  of  the  period,  and  returned  purchases.  The  difference  between  the 
totals  is  the  factory  cost  of  the  finished  goods,  which  is  entered  on  the  credit  side,  and 
brought  down  into  the  Trading  account  section. 

Some  accountants  place  the  present  inventories  on  the  credit  side  of  the  Manufacturing  account  section,  as 
offsets,  instead  of  deducting  them  from  the  debits,  as  described  above. 

Prepare  the  Manufacturing  account  section  of  your  statement,  as  shown  in  the  form, 
obtaining  the  amount  of  the  depreciation  items  froin  your  Machinery  and  Equipment,  Tools, 
and  Lasts  and  Patterns  accounts.  Foot  and  rule  off  the  section,  and  bring  down  the  finished 
goods  item  into  the  Trading  account  section. 

Prepare  the  Trading  account  section  of  the  statement,  and  as  illustrated  on  pages  302 
and  303.  Foot  and  rule  off  the  section,  and  bring  down  the  gross  trading  profit  into  the 
first  section  of  the  Profit  and  Loss  statement. 

Prepare  the  first  section  of  the  Profit  and  Loss  account,  obtaining  the  inventory  amounts 
from  your  schedules,  and  the  amount  of  the  depreciation  item  from  your  Office  Equipment 
account.  Foot  and  rule  off  the  section  and  bring  down  the  net  profit  on  trading  into  the 
next  section. 

Prepare  the  final  .section  of  the  statement,  reserving  $  loooo  for  depreciation,  and  2'/,  of 
the  amount  of  the  outstanding  Accounts  Receivable  for  bad  debts.  Credit  the  balance  of 
the  net  profit  to  Surplus. 

Balance  Sheet.  — The  balance  sheet  of  a  business  corporation  is  similar  in  form  to  that 
of  a  proprietary  business,  excepting  that  the  assets  and  liabilities  are  arranged  in  the  order 
of  fixed  and  floating,  or  current.     (See  form,  pages  304  and  305.) 


302 


MODEK.V   ILLUSTR.\T1VE   BOOKKEEPING 


M.\.\UFACTURING,    TRADING,    AND 

Tin-  Daklixgton  Shoe  Compaxv.  t r 


.\laterials : 

Inventory.  Jan.  i 
Purchases  to  Dec.  31 
Less  Return  Purchases 

Deduct:   Inventory.  Dec.  31 
Cost  of  Materials  u.sed 
Inventory,  Goods  in  Process  Jan. 
Freight  Inward 
Labor 


Deduct:  Goods  in  Process  Dec.  31 

Prime  Cost 

Mfg.  E.\pensc.s,  per  Analysis  Book 

Fuel 

Less  Inventory.  Dec.  31 
Indirect  Labor 
Factory  Supplies : 

Less  Inventory.  Dec.  31 
Depreciation  as  under : 

Machinery  and  Equipment 

Tools 

Lasts  and  Patterns 

Finished  Goods : 
Inventory,  Jan.  i 
Factory  Output,  from  Mfg.  Account 

Deduct:  Inventory.  Dec.  31 

Factory  Cost  of  Sales 
Gross  Profit  on  Trading 

Selling  Exjjenses 

Less  Inventory,  shipping  dcpt.  supplies 
General  and  Administrative  Expenses 
Depreciation  on  office  equipment 

Less  Inventory,  office  supplies 
Interest,  debit  balance 

Accrued  on  notes  payable 

Less  accrued  on  notes  receivable 
Allowances  to  Customers 
Discount  on  Sales 

Less  discount  on  purchase 
Collection  and  Exchange 
Net  Profit  OH  Trading; 

Reserve  for  Dejireciation 
Reserve  for  bad  debts 
Surplus 


12396 

18 

153817.62 

952-35 

152865 

165261 

14580 

27 

45 
10 

1506S1  35 

24686  31 

371  84 

_io9345 
285084 

I25 
75 

1 7661 

45 

267423 

30 

1 1463 

47 

4085.75 

•675. 

2410  1  75 

4580 

"394-45 

2315.70 

9078 

75 

5103.50 

545- 

8267.25 

'39'5 

75 

41448 

72 

308872  ;  02 

14631.50 

308872.02 

323503 

52 

12713 

25 

310790 

27 

2474592 

- 

losoyz     gS 

412863 

.25. 

327-4; 

24418 

47 

15892.65 

35S. 

16250.65 
536.25 

15714 

40 

135.62 

40. 

175.62 

log. 36      66 

26 

418 

25 

S9;2.75  I 

7310.53     1642 

-y^ 

' 

296 

S8 

42556 

595'6 

102072 

18 
J9^ 

12500 

3750 

43266 

80 

59516 

80 

_i95'6 

8<J 

MAiN'UFACTURlXG 


:'.03 


Profit  and  Loss  Statement 
year  ending  december  3i,  1 9 — . 


Finished  Goods,  factory  cost  of  output  transferred  to  Trading 
-Account 


Sales 

Deduct: 
Returned  Sales 
Net  Sales 


Gross  protit  on  trading,  down 


Net  profit  on  trading,  down 


308872     02 


414387 


1523 


06 


8i 


308872    02 


412S63    25 


4i2863_  j5_ 
102072    98 


102072    98 
59516    80 


59516    80 


304 


MODEUN   ILLUSTRATIVE   BOOKKLLl'ING 


Balance 

Thk    Daki  iNirr. 'V    S"n|- 


ASSETS 


Real  Estate 

Machinery  and  Equipment 

Tools 

Lasts  and  Patterns 

Office  Equipment 


I  Depreciation 
I  Good  Will 


Current  Assets : 

Inventories : 
Raw  materials  and  supplies,  and  goods  in  process 
Finished  goods 
Accounts  Receivaljie 
Notes  Receivable 
Cash  in  bank  and  on  hand 


51035. 

5450. 
33069. 

3580- 
93 '34- 
1427375 


37095-95 
•2713-^5 


78S60    25 
25000 


49809 
64386    45 

323<S    50 
27853  '  65 


229610  ■  25 


174367 


80 


403978    o^ 


Prepare  a  balance  sheet  beginning  with  the  most  fi.xed  asset  (real  estate),  and  ending 
with  the  quickest  or  most  liquid  (cash).  Treat  the  balance  of  Imprest  Fund  Account  as 
cash  on  hand.  The  amount  should  agree  with  the  balance  of  the  petty  cash  book.  Arrange 
the  items  on  the  credit  side  in  the  order  of  capital  stock,  current  liabilities  (you  have  no 
fixed  liabilities),  reserves,  and  surplus. 

Closing  the  Ledger.  —  You  will  close  the  ledger  by  passing  the  entries  through  the  jour- 
nal, as  explained  on  page  245.  Frame  a  journal  entry  debiting  Finished  Goods,  for  the 
factory  cost  of  goods  manufactured  during  the  period,  as  shown  by  the  credit  side  of  the 
Manufacturing  account  section  of  the  statement,  Sundry  Inventories,  for  the  amount  of  the 
inventories  on  December  31,  as  shown  on  the  debit  side,  and  credit  the  proper  accounts  for 
their  respective  amounts. 

The  inventories  of  fuel  and  factor)-  supplies  will  be  credited  as  separate  items,  with  proper  e.\planations,  to 
M anufacturinij  Expenses. 

Frame  an  entry  to  close  the  accounts  in  the  Trading  account  section,  debiting  Sales  and 
Sundry  Inventories  (of  December  31),  and  crediting  Finished  Goods  (for  Inventory,  Decem- 
ber 31),  Return  Sales,  and  Profit  and  Loss,  for  the  amounts  shown  in  the  section. 

Frame  an  entry  to  close  the  accounts  in  the  first  section  of  the  Profit  and  Loss  account, 
obtaining  inventory  amount  from  your  schedules,  and  the  amount  of  depreciation  from  your 
Office  Equi|)ment  account.  Credit  the  expense.  Depreciation,  and  Discount  on  Sales 
accounts.  Interest,  and  Collection  and  E.xchange,  and  debit  Discount  on  Purchases,  Sundry 
Inventories  for  their  respective  amounts,  and  Profit  and  Loss  for  the  difference. 

Frame  an  entry  to  close  the  accounts  in  the  last  section  of  the  statement,  and  post. 

You  will  now  adjust  the  accrual  and  inventory  entries.  Frame  an  entry  crediting  the 
proper  accounts  for  the  wages  and  salaries  accrued  December  31  (see  your  original  entries 
for  these  accruals),  and  debit  Accrual  account  for  the  amount.  (See  Accrual  Account, 
page  300.) 


MANUFACTURIXG 


3Uo 


Sheet 

CoMr'AXY,  December  31,  19 — . 


• — 

Liabilities 

Capital  Stock : 

Preferred                                                                                 looooo. 

Common                                                                                  150000. 
Real  Estate  Mortgage 

Current  Liabilities : 
Accounts  Payable 
Notes  Payable 
Accrued  Charges 

Reserves  : 
Depreciation 
Bad  Debts 

Surplus 

250000 
25000 

84 
57 

275000 

26607 

45114 
57256 

17799 
7500 

1307 

39852 
526. 

50 
83 

41 

33 

31 

403978 

OS 

Frame  an.  entry  to  adjust  the  inventories  of  December  31.  Debit  the  proper  accounts 
for  the  inventories  (see  your  original  entry  for  these  inventories),  and  credit  Sundry  Inven- 
tories for  the  total  amount.     Post  the  entries. 

Foot  and  rule  off  all  nominal  accounts  that  balance,  also  all  accounts  in  the  sales  ledger 
that  balance. 

You  have  now  completed  the  records  and  statements  of  the  business  for  the  fiscal  peuod, 
ending  December  31,  19 — ,  and  the  books  are  in  proper  shape  to  receive  the  records  of  the 
next  fiscal  period.  As  previously  explained,  a  portion  of  the  profits  of  a  corporation  is  dis- 
tributed to  the  stockholders  in  the  form  of  dividends,  which  are  declared  by  the  Board  of 
Directors  at  certain  periods,  as  quarterly,  semi-annually,  and  annually.  You  may  assume 
that  the  Board  of  Directors  of  the  company  have  declared  an  annual  dividend  of  10  V  from 
surplus  on  the  outstanding  capital  stock,  payable  on  January  25,  19 — ,  to  stockholders  of 
record  of  January  15.     Frame  a  journal  entry  for  the  dividend  declared. 

In  practice,  the  stock  books  would  be  closed  January  15  to  give  the  secretary  an  oppor- 
tunity to  make  up  a  list  of  persons  holding  stock  on  that  date.  This  list  would  be  turned 
over  to  the  treasurer,  who  would  send  dividend  checks  to  the  stockholders  on  January  25, 
at  which  time  the  Dividend  account  would  be  charged  with  the  total  amount. 


EXERCISES 

The  following  exercises  are  to  be  prepared  on  loose  paper : 

I.  The  petty  cash  book  of  the  Gile  Manufacturing  Company  shows  the  following  entries 
for  December,  19—,  dates  being  omitted  :  Office  postage,  $5,  $5,  $2.25  ;  Supplies  for  Ship- 
ping Dept.,  S4.50,  S4,  S2.50,  S3-50,  S5.75;  Express  In,  Si. 15,  S.75.  Si-40,  S3-io,  $-45; 
Express  Out  and  Charge,  S2.15,  51.85,  S3.40,  $.95;  Express  Out  Expense,  Si. 45,  S-SO. 
;^i.35,  S2.75,  Si;  Extra  window  cleaning,  office,  $1.75;  Glazing  factory  windows, 
S3-55;  Telegrams,  S.57.  S-25,  S.42,  $1.12,  $.62,   S.38.   S.2S;    Protest  fees,  Si. 50,  S2.25, 


306  MODERN    ILLUSTRATIVE   liOOKKKKI'lNO 

S1.75,  $2. 50;  Extra  carting:  Inward,  S1.50,  Si,  S1.75,  S2.50;  Outward,  $3,  $2.50; 
Si,  S2.25;  Lettering  office  window,  S1.75;  Shojj  signs,  S3. 50;  Repairing  superin- 
tendent's office  chair,  Si-25;  Donations:  Factory  Christmas  entertainments^  S5;  Tickets, 
Policemen's  Hcnevolent  Association,  S3;  Printing,  shop  tags,  S4.50;  Shipping  labels, 
S3-7S;  Office  envelopes,  S2.50;  Coin  wrappers,  S1.2S;  Pay  envelopes,  52.25;  Great 
Bear  Water,  office  use,  S  1.75  ;  Cab  hire  :  Office,  Si. 50,  Si. 25,  S3;  Factory,  Si. 25,  Si-So; 
Repairing  rollers:   Factory,  S1.25;  Shipping  Room,  S2.50. 

Analyze  the  above  entries,  and  make  a  summary  of  the  same. 

2.  The  balance  sheet  of  the  Dunning  Manufacturing  Company,  as  of  June  30.  19 — , 
showed  the  following  production  inventories:  Materials,  S 2 1652.24;  Goods  in  Process, 
S7941.83;  Finished  Goods,  factory  cost,  S34659.65;  Factory  Supplies,  S  1512.88.  Their 
trial  balance  at  the  end  of  the  fiscal  year  showed:  Purchases  of  Materials,  S 53439.72;  of 
Factory  Supplies,  S3918. 76;  Purchases  Returned,  S 324. 15;  Allowances  on  Purchases, 
Si  17.53;  F"reight  Inward,  S612.97;  Direct  Labor,  S  13287.29;  Manufacturing  E.xpenses, 
S9643.71  ;  Depreciation,  S2406.25.  Their  [)roduction  inventories  at  the  end  of  the  period 
were:  Materials,  S  19264.36;  Goods  in  Process,  S8476.34;  Finished  Goods,  factory  cost, 
S3 1214.82;   Factory  Supplies,  S2263.30. 

PVom  the  above  d:ita  prepare  the  Manufacturing  Account  section  of  the  Manufacturing, 
Trading,  and  Profit  and  Loss  Statement. 

3.  The  balance  sheet  of  the  Drake  Manufacturing  Company  for  the  fiscal  period  ending 
December  31,  19 — ,  showed  the  following  assets  and  liabilities,  capital  stock,  and  surplus, 
the  cents  being  omitted  :  Cash,  S  31420 ;  Investments  (marketable),  S  16340;  Notes  Receiv- 
able, S9320,  and  Accounts  Receivable,  Si  14930,  less  depreciation  on  both,  S6212;  Raw 
Materials,  S38470;  Goods  in  Process,  S  13290;  Finished  Goods,  S228336,  less  depreciation, 
S11416;  Buildings,  Si 7360,  less  depreciation,  S 868;  Land,  S8450;  Machinery  and  Equip- 
ment, S  192470,  less  depreciation,  S  15397;  Tools  (revalued),  S4483  ;  Furniture  and  Fixtures 
(revalued),  S8940;  Patents,  Models,  and  Patterns,  S82480,  less  depreciation,  S  16496;  Sink- 
ing Fund  Investment,  S22500;  Goodwill,  S50000;  Loans  Payable,  S15000;  Notes  Pay- 
able, S 18730;  Accounts  Payable,  S  162470;  Mortgages  Payable,  S50000;  Preferred  Stock, 
S250000;  Common  Stock,  S250000;  Sinking  F'und,  S22500 ;  Surplus.  S22400.  Deferred 
Assets:  Insurance,  S5200;  Interest  Receivable,  S550;  Advances  on  Freight  Deliveries, 
S2400.      Deferred  Liability:   Interest  Payable,  S  5450. 

Prepare  the  above  balance  sheet  in  proper  form,  arranging  the  assets  and  liabilities  in 
the  order  of  fixed  and  current. 

4.  From  the  following  data  jirepare  a  balance  sheet  and  a  statement  of  earnings  of  the 
United  Manufacturers  Company,  December  31,  19 — :  Assets:  Cost  of  Properties,  includ- 
ing trade  marks,  patent  rights,  real  estate,  buildings,  and  machinery  and  equipment, 
S  16359861.95  ;  Net  Additions  during  the  year,  S1630.30.  Investments  in  Affiliated  Com- 
panies, S 575000.  Deferred  Charges  to  Operations:  Insurance,  Interest,  and  Other 
Periodic  Expenses,  prepaid,  S  124193.30;  Expenses  of  Incorporation,  S22298.34,  less  pro- 
portion written  off,  S  3344.75.  Inventories  of  Raw  and  Finished  Products  and  Supplies  on 
Hand,  S4077973.79.  Accounts  Receivable,  S  1S92705. 86,  less  reserve  for  discounts,  S 50000. 
Notes  Receivable,  S98281.52.  Advances,  recoverable  and  to  agents,  S30336.49.  Cash  on 
Hand,  in  banks,  and  in  transit,  S5726S0.22.  Cumulative  Preferred  Stock,  S  5000000;  Com- 
mon Stock,  Si 5000000.  Liabilities:  Notes  Payable,  S 2661 563:  Loans  and  Deposits  to 
Officers,  S222621.14,  to  others,  S149550.50;  Accounts  Payable  and  Accrued  Pay  Rolls, 
SI58554-33-     Surplus,  S . 


M  AN  U  I-'ACTU  K I XG  :  ',0  7 

Sales,  less  returns  and  allowances,  $9127542.87;    Producing  and  Manufacturing  Costs, 

$7224680.48;    Gross  Earnings,  S .      Selling  and  General  Administrative  Expenses, 

$1125875.07;   Earnings  from  Operations,  $ .      Miscellaneous  Profits  and  Interest 

Received,  S64259.69;  Total  Net  Earnings,  5 .      Miscellaneous  Charges  :  Interest  on 

Loans  and  Deposits,  S  106923.96;  Special  Reserve  for  Discounts  on  Customers'  Accounts, 
$50000;   Dividends  on  Preferred  Stock,  $175000;  Net  Surplus  PZarnings,  $ . 

Show  the  entries  which  would  be  framed  when  a  semi-annual  dividend  of  r|  '/,  on  the 
preferred  stock  has  been  declared  out  of  surplus  by  the  above  company,  and  when  the 
dividend  has  been  paid  by  checks. 

5.  The  annual  statement,  December  31,  1910,  of  the  Central  Leather  Company  showed 
assets  as  follows :  Fixed  Assets  :  Property  Account,  including  timber  lands,  railroad  and 
floats  engaged  in  the  lumber,  glue,  and  other  allied  industrial  operations,  $67154412.21  ; 
Investments,  $950228.04.  Current  Assets  :  Inventories:  Leather  in  Stores,  Lumber,  and 
Other  Finished  Products,  $  1 73 53347-05  :  Hides  and  Leather,  raw  and  in  process,  and  Other 
Materials,  S  36588335.62  ;  Accounts  Receivable,  $8790850;  Notes  Receivable,  $992080.80; 
Cash  in  Banks  and  on  Hand,  $4325982.98  ;  Deferred  Charges  to  Profit  and  Loss,  $306405.43. 
The  capital  stock  and  liabilities  were  as  follows:  Preferred  Stock,  $33299050.00;  Common 
Stock,  $39701030.50.  Plxed  Liabilities:  First  Mortgage  Five  Per  Cent  Bonds,  $36764150; 
The  United  States  Leather  Company  Debentures,  $3401000;  Real  testate  Mortgage, 
$100,000.  Current  Liabilities:  Notes  Payable,  $1595500;  F"oreign  Drafts,  $585005.54; 
Accounts  Payable,  $1149085.25  ;  Accrued  Interest  on  Bonds  and  Debentures,  $493561.87; 
Dividend  on  Preferred  Stock,  payable  January  i,  191 1,  $582732.50.  Reserves:  Fire  Insur- 
ance, $123034.41;   Miscellaneous,  $501785.98. 

Prepare  a  consolidated  balance  sheet  for  the  above  in  proper  form,  and  show  the  sur- 
plus, arranging  the  items  in  the  order  given. 

The  profits  for  the  year,  after  deducting  all  losses  and  expenses,  were  $3403680.11,  and 
the  income  from  investments  was  $144210.24.  The  deductions  from  revenue  were: 
Interest  on  Bonds  and  Debentures,  $2053387.50;  dividend  on  preferred  stock,  $2330930. 
The  surplus  on  January  i,  1910,  was  $4642633.23. 

Prepare  a  consolidated  profit  and  loss  statement,  showing  the  balance  to  surplus,  the 
surplus  for  January  i,  1910,  and  the  surplus  for  December  31,  iqio. 

From  the  balance  sheet,  prepare  a  detailed  statement  of  the  quick  assets  and  current 
liabilities,  and  show  the  net  surplus,  stating  which  it  is  —  quick  assets  or  current  liabilities. 

6.  In  this  exercise  you  will  be  required  to  find  costs  of  goods  in  process  and  of  finished 
goods,  and  to  distribute  burden  bv  the  direct  labor  cost  method.  (See  Cost  Keeping,  and 
the  paragraphs  relating  to  the  same,  on  pages  279  to  282).  Rule  nine  money  columns,  full 
length,  on  a  sheet  of  foolscap  paper,  and  head  the  columns  as  follows  :  Materials,  Labor, 
Prime  Cost,  Burden,  Factory  Cost,  Expense,  Total  Cost,  Profit,  Selling  Price. 

From  the  data  given  below  find  the  total  cost  of  materials,  the  total  labor  cost,  and  the 
prime  cost  of  the  following  goods  in  process,  entering  each  article  separately  on  the  sheet, 
and  heading  the  section,  Goods  in  Process. 

No.  i:  M.  (materials),  $139.50;  L.  (labor),  $56.04.  No.  2  :  M.,  $141.62;  L.,  $112.08. 
No.  3:  M.,  $104.18;  L.,  $92.25.  No.  4:  M.,  $75.06;  L.,  $13.75.  No.  5:  M.,  $92.12; 
L.,  $6.19.  No.  6  :  M.,  $  1 12.24  ;  L.,  $48.72.  No.  7  :  M.,  $  124.85  ;  L.,  $  104.25.  No.  8  :  M., 
$152.10;  L.,  $15.60.     No.  9:  M.,  $176.90;  L.,  $140.35.     No.  10:  M.,  $210.05  ;  L.,  $223.96. 

Rule  off  all  columns  of  this  section,  and  head  the  next  section,  Finished  Goods. 

Next,  on  the  same  sheet,  find  the  prime  cost  of  each  of  the  following  articles  of  finished 


308  MODERN   ILLUSTRATIVE   BOOKKEEPING 

goods,  the  total  cost  of  materials,  the  total  labor  cost,  and  the  total  prime  cost :  No.  i  : 
M.,  S2790.3S;  L.,  S3052.0S.  No.  2  :  M. ,$2807. 25;  L.,  S3221.52.  No.  3  :  M.,  S2102.26; 
L.,  S2603.06.  No.  4:  M.,  S14S4.14;  L.,  S1S42.34.  No.  5:  M.,  S1801.82;  L.,  S2300.32. 
No.  6:  M.,  S2303.38;  L.,  S2655.09.  No.  7:  M.,  S2475.12;  L.,  S3096.36.  No.  8: 
M. ,53038.08;  L.,  S3782.84.  No.  9:  M., 53517-54;  L.,  S4254-32.  No.  10:  M.,  S4162.46; 
L.,  S  5038.08. 

Rule  off  all  columns  of  this  section,  and  head  the  next  section,  Summary. 

Find  the  total  costs  of  materials  used  in  the  goods  in  process,  and  in  the  finished  goods, 
and  the  total  labor  costs,  and  show  the  same  in  the  Summary  section.  Ne.\t  find  what  per- 
centage the  labor  cost  of  goods  in  process  bears  to  the  total  labor  cost,  carrying  the  quotient 
to  three  decimal  places,  and  show  the  same  in  the  explanation  column  of  this  section.  Then 
find  the  percentage  of  labor  cost  of  finished  goods  in  the  same  way,  and  show  it  in  this 
section. 

The  overhead  charges  (Mfg.  Ex]i.)  for  the  period  were  S1019S.15,  and  the  amount 
charged  off  for  depreciation  was  S4500.  Find  the  total  burden,  and  charge  such  a  part  of 
it  to  goods  in  process  as  you  found  the  cost  of  labor  on  these  goods  to  be  of  the  total  labor 
cost.  Enter  the  amount  in  the  Burden  column  of  the  goods  in  process  section.  Complete 
this  section  by  finding  the  factory  cost,  and  extending  the  amount  into  the  proper  column. 
Foot  the  columns. 

Deduct  the  amount  of  the  burden  on  the  goods  in  process  from  the  total  burden  to  find 
the  amount  to  be  distributed  over  the  finished  goods.  Find  the  ratio  of  burden  by  the  direct 
labor  cost  method,  and  distribute  the  burden  over  each  of  the  articles,  and  place  the 
amounts  in  the  proper  column.  l'"oot  the  column.  Next  find  the  factory  cost  of  each  of 
the  articles,  and  show  the  amounts  in  the  proper  column.      P'oot  the  column. 

The  selling  and  general  and  administrative  expenses  for  the  period  were  S  17635.76. 
The  profit  wanted  is  20'/- 

Find  the  pei"centage  of  expense  as  follows:  First,  add  the  amount  of  the  fourth  element 
of  cost  to  the  total  factory  cost,  which  will  give  the  fifth  element  of  cost,  or  total  cost ; 
second,  divide  this  amount  by  100'/,  less  the  per  cent  of  profit,  to  find  the  total  selling 
price;  third,  divide  the  amount  of  the  selling  and  general  and  administrative  expenses  by 
the  total  selling  price,  which  will  give  the  percentage  of  expense.  Distribute  the  expense 
over  each  of  the  articles,  and  enter  the  amounts  in  the  proper  column.     Font  the  column. 

Find  the  total  cost  of  each  of  the  articles,  and  show  the  amounts  in  the  proper  column. 
Foot  the  column. 

F"ind  the  profit  on  each  of  the  articles  and  the  selling  prices  of  the  same,  and  show  the 
amounts  in  the  proper  columns.      Foot  the  columns. 

Using  the  model  on  page  280,  prepare  from  your  cost  finding  sheet,  a  diagram  of  cost 
finding  for  the  finished  goods,  and  show  the  results  in  the  Summary  section  of  the  sheet. 
Rule  off  the  section. 

The  following  exercises  are  given  for  practice  in  schools  which  have  adding  machines : 

7.  Prove  the  postings  to  your  sales  ledger  by  listing  first,  the  charge  entries  in  the 
original  books,  second,  the  charge  postings  in  the  accounts  in  the  ledger,  and  compare  the 
totals  ;  third,  by  listing  the  credit  entries  in  the  original  books,  and  fourth,  the  credit 
postings  in  the  accounts,  and  compare  the  totals.  Prove  the  postings  in  your  general  ledger 
in  the  same  way. 

8.  Prove  your  Accounts  Payable  account  by  listing  first,  the  original  credit  balance 
and  all  your  voucher  jackets;  and  second,  all  paid  jackets,  and  compare  the  difference  in 


MANUFACrURIXG  300 

the  totals  with  the  balance  of  the  account,  as  shown  by  your  balance  sheet.  Verify  the 
balance  by  listing  the  credit,  and  charge  postings,  as  instructed  in  No.  7,  and  find  the 
difference  in  the  totals. 

9.  List  and  add  the  following  items:  1423.64,  377.56,  713.86,  338.67,  674.28,  524.98, 
289.24,700.77,  580.92,  1342.86,  472.10,  1447-07-  750.95.  650.25,  657.39,  1028. 1 1,  692.32, 
1212.89,  469(^7,  1918-70,  236.60,  690.04,  966.37,  1659.38,  103.63,  283.69,  505.53,  595.30, 
J404.20,  3331-44.  2202.20,  4466.55,  1777.64. 

10.  List  and  add  the  following  deposits  and  checks,  and  show  the  bank  balance: 
Deposits,  Balance. —8375.92.  1.-1254.06;  2.  — 345.04;  3.— 402.53;  5.-259.46; 
6.  — 577-59;  "•  — 359.87;  8.  — 104.56;  9.  — 240.57;  10.— 1145.22;  12.  — 310.30; 
13.  — 240.57;  14.-1161.10;  15.  — 259.40;  16.— 1356.52;  17.— 631.30;  19.  — 1226.29; 
20.  —  2142.36;  21.  —  703.28;  22. —  592.46;  23. — -177.80;  24. —  111.19;  26.  —  392.15; 
27.— 817.93;  28.— 412.19;  29. —  1006.04;  30.  — 1715.43.  Checks:  243.24,  345.67, 
1020.50,  65.01,  78.7S,  220.34,  354-O0,  41.00,  450.70,  66.06,  8.03,  5.00,  749.26,  1104.05,  143.10, 
400,  267.76,  1059.90,  444.45,  19  10,  26,  450625,  700,  540.34.  2106.78,  1725.50, 
346,  444-03.  1223.45,  54-35.  245.87,  1011.36,  104.01,  2775.50,  103.40,  3.13,  1S1.20, 
1623.92,  19.60,  20.10,  53.80,  203,  1781.25,  120.19,  65.22,  13.37,  1210.32. 


QUESTIONS 

1.  Define  manufacturing,  raw  materials,  and  finished  goods. 

2.  Explain  what  is  meant  by  '•  indu.strial  production,"  and  state  how  it  has  been  aflfected  by  the  substitu- 
tion of  mechanical  for  human  forces. 

3.  How  do  manufacturers  dispose  of  their  products  ? 

4.  What  is  meant  by  the  '-factory  system '"  ? 

5.  What  is  the  purpose  of  organization,  and  how  does  it  affect  manufacturing  ? 

6.  Explain  efficiency,  as  applied  to  manufacturing. 

7.  What  do  the  activities  of  a  manufacturer  comprise  ?     Wliat  is  '-stock  keeping"  ?     "Cost  keeping"  ? 

8.  To  what  do  the  records  of  a  manufacturing  business  relate  .''     Explain  how  these  records  are  kept  with 
reference  to  what  they  show. 

g.    What  is  the   distinctive   account   in  a  manufacturing  business,  and   wliat  does  it  show  .''     How  is  it 
represented  ? 

10.  What  other  accounts  are  peculiar  to  a  manufacturing  business  ? 

11.  How  may  expenses  be  classified,  and  what  are  the  advantages  of  such  a  classification  ? 

12.  Explain  the  analysis  book,  and  state  what  you  tliink  is  its  use. 

13.  What  is  the  purpose  of  a  "purchase  requisition."  or  of  a  -stock  report"  ?     Explain  what  is  meant  by 
a  •'  purchase  order,"'  and  state  how  it  is  usually  made  out.  and  what  is  done  with  it. 

14.  How  are  invoices  and  expense  bills  usually  treated  in  a  mannflicturing  business  ?     Wiiat  are  necessary 
to  make  this  system  of  records  complete  .' 

15.  What  is  a  voucher  jacket  ?     Explain  its  form  and  use. 

16.  Describe  briefly  the  voucher  register,  and  state  how  it  should  be  proved  before  posting. 

17.  Explain  the  advantages  of  the  form  of  cash  book  you  used  in  the  Shoe  Manufacturing  Business. 

18.  What  is  an  "  imprest  fund."  and  how  is  it  treated  ? 

19.  What  is  a  ■•  petty  cash  book,"  and  to  what  book  or  books  is  it  subsidiary  .''     What  is  done  with  the 
entries  in  this  book  ? 

20.  Explain  the  use  of  the  stock  ledger,  and  state  what  is  meant  by  a  "perpetual  inventory." 

21.  Explain  the  two  general  methods  of  production  in  manufacturing,  and  state  some  of  the  commodities  to 
which  each  method  can  be  applied. 


810  MOUKKX   ILLUSTKATlVt:   BOOKKEEl'ING     . 

22.  Kxplain  what  i>  incaiu  by  cost  keeping,  as  applied  to  manufacturing  and  its  principal  objects. 

23.  What  are  the  elei-.'.ents  of  cost  ?  Using  your  own  ligures.  draw  a  diagram  of  cost  finding,  and  show  tlie 
percentages. 

24.  What  is  .1  "pi  odiiction  order"  ?     .-X  "  material  requisition '■  ?     A  "  labor  ticket  "  ?     A  "pay  roll"? 

25.  How  is  cost  divided,  and  how  are  the  prime  cost  amounts  found  ? 

26.  What  is  a  '•  cost  record  "'  ?     A  "  cost  ledger"  ? 

27.  Name  si.^  wage  systems,  and  explain  the  two  which  are  most  generally  used. 

28.  What  is  ••  burden."  and  what  does  it  include  .'     What  otlier  names  are  given  to  it  ? 

29.  When  and  how  is  the  cost  of  burden  found  ? 

50.  Name  five  methods  of  distributing  burden  commonly  used  in  connection  with  cost  systems.  Explain 
two  of  these  methods. 

31.  What  is  a  "production  report,"  and  what  record  is  made  when  one  is  received  ? 

32.  Wliat  account  in  a  manufacturing  business  corresponds  to  the  Purchaser's  account  in  a  mercantile 
business  ? 

33.  What  is  meant  by  '"goods  in  process,"  and  how  is  their  inventory  value  found  ? 

34.  Name  the  departments  into  which  a  modern  shoe  factory  is  usually  organized,  and  the  work  done  in 
each  department. 

35.  What  materials  ;ire  used  in  the  manufacture  of  shoes  ? 

36.  What  are  '•  lasts  "^  and  "  patterns,"  and  what  purposes  do  they  serve  ? 

37.  How  were  shoes  formerly  produced  ?     How  are  tliey  produced  now  ? 

38.  Explain  the  production  order  used  in  slioe  manufacturing,  and  give  some  of  the  details  of  its  use. 

39.  Name  three  processes  of  sewing  the  uppers  to  the  soles  of  shoes,  and  explain  each  process. 

40.  What  is  an  Accrual  account  ?  When  constructed,  for  what  is  it  debited  ?  For  what  credited  ?  What 
entries  are  made  in  this  account  when  tlie  accruals  are  adjusted  ? 

41.  When  and  how  are  tlie  accrual  and  inventory  entries  adjusted  ? 

42.  Explain  in  detail  tlie  Manufacturing  account  section  of  the  Manufacturing,  Trading,  and  Profit  and 
Loss  Statement,  and  state  what  the  balance  shows,  and  what  item  is  brought  down  into  the  Trading  account 
section. 

43.  How  is  the  gross  profit  on  trading  found  in  tlie  manufacturing  business  ?  How  the  net  profit  ?  To 
what  account  is  the  net  profit  or  net  loss  of  a  manufacturing  corporation  carried  .' 

44.  Kescribe  the  usual  form  and  arrangeuTjnt  of  the  balance  sheet  of  a  business  corporation. 

45.  Explain  in  dct.iil  how  you  closed  the  accounts  in  the  Manufacturing  account  section  of  your  statement ; 
in  the  Trading  account  section  ;  and  in  the  Profit  and  Loss  section. 

46.  Wliat  entry  should  be  framed,  when  a  dividend  has  been  declared  ?     When  it  is  paid  in  cash  ? 


APPENDIX  I 

•  AUDITING 

Auditing  is  the  examining  of  the  entries  in  books  of  accounts,  and  of  the  subsidiary  and 
supporting  records.  Such  an  examination  is  called  an  "  audit,"  and  a  person  who  makes  it 
is  called  an  "auditor." 

The  practice  of  auditing  is  an  established  profession.  The  professional  auditor  is  usually  an  expert 
accountant,  and  many  auditors  are  al.so  certified  public  accountants,  who  practice  under  the  authority  of  a 
certificate  granted  them  by  a  State  Board  of  Accountancy,  or  other  similar  body,  and  which  entitles  such 
accountants  to  use  the  abbreviation  C.  P.  A.  after  their  names. 

Object  of  an  Audit.  —  The  principal  object  of  an  audit  is  the  detection  of  errors  and 
fraud  in  the  records  ;  that  is,  to  determine  whether  or  not  the  records  are  correct  and  com- 
plete, and  the  bookkeeping  work  has  been  honestly  and  efficiently  done. 

Term  of  Audit.  —  The  space  of  time  covered  by  an  audit  is  called  the  "  term  of  audit "  ; 
and  this  may  be  any  time  agreed  upon  between  the  auditor  and  his  client;  as,  six  months, 
one  year,  five  years,  etc.  The  first  date  of  the  term  of  audit  is  called  the  "  initial  date,"  and 
the  last  date,  the  "  terminating  date." 

Kinds  of  Audits.  —  Audits  are  divided,  with  reference  to  time  when  made,  into  First 
Audit ;  Continuous  Audit,  usually  once  a  month  ;  Periodic  Audit,  usually  once  a  year ; 
Special  Audit,  also  called  an  "Inspection,"  made  on  behalf  of  an  intending  purchaser,  a 
creditor,  a  retiring  partner,  or  on  account  of  suspected  fraud;  Final  Audit,  for  the  adjust- 
ment of  a  partnership,  or  on  the  discontinuance  of  a  business. 

Audits  are  divided,  with  reference  to  different  classes  of  business  or  activities,  into  Com- 
mercial Audits,  which  include  trading,  manufacturing,  and  mining  concerns ;  Financial 
Audits,  which  include  banks,  insurance  companies,  public  service  corporations,  building  and 
loan  associations,  societies,  clubs,  etc.;  and  Municipal  or  Public  Audits,  which  include  the 
accounts  of  towns,  cities,  counties,  states,  and  governments. 

Only  commercial  audits,  as  they  relate  to  trading  and  manufacturing  concerns,  will  be  treated  in  this  book. 
For  further  information  on  auditing,  the  student  is  referred  to  the  special  books  on  the  subject. 

Duties  of  an  Auditor.  —  An  auditor  should  critically  exainine,  or  satisfy  him.self  as  to 
the  accuracy  of,  all  entries  in  the  books  of  account  made  during  the  period  under  audit, 
inspect  all  available  vouchers,  and  compare  them  with  the  records;  verify  all  assets  and 
liabilities  as  of  the  terminating  date  ;  make  a  report  of  his  audit ;  and  certify  to  the  accuracy 
of  the  balance  sheet. 

Auditor's  Working  Papers. — The  papers  which  an  auditor  uses  in  making  an  audit  are 
called  "  working  papers."  These  include  trial  balances,  abstracts,  balance  sheets,  analysis 
sheets,  etc.  In  addition  to  these  working  papers,  auditors  use  a  notebook  in  which  they 
make  records  of  such  matters  as  will  assist  them  in  making  their  report. 

Kinds  of  Errors.  —  In  examining  entries  in  books  of  accounts,  there  are  three  kinds  of 
errors,  the  presence  of  which  the  auditor  should  detect,  or  the  absence  of  which  he  should 
prove.     These  are  intentional  errors,  tcclinical  errors,  and  errors  of  principle. 

311 


312  APPENDIX    I 

Intentional  errors  are  errors  made  for  the  purpose  of  perpetrating  or  concealing  fraud. 
Technical  errors  are  errors  which  are  made  through  carelessness,  such  as  posting  to  the 
wrong  account,  mistakes  in  footing,  or  carrying  footings  forward,  etc.  Errors  of  principle 
are  of  two  kinds,  viz.,  those  of  oniis.sion  and  tho.se  of  commission.  Errors  of  omission  are: 
failure  to  provide  proper  reserves  for  depreciation  of  property-  subject  to  deterioration,  or  for 
shrinkage  of  values ;  failure  to  include  in  the  assets  and  liabilities  amounts  accrued  but  not 
duo,  such  as  interest,  insurance,  ta.\es,  etc.,  and  pre])aid  charges.  Errors  of  commission 
include  mistakes  made  in  framing  original  entries,  such  as  charging  or  crediting  items  to 
capital  accounts  which  should  be  placed  to  revenue  or  expense  accounts,  or  vice  versa. 

Method  of  Audit.  — The  general  principles  of  auditing  apply  to  all  kinds  of  audits,  but 
the  particular  method  of  making  an  audit  will  depend  somewhat  upon  the  kind  of  audit  to 
be  made,  the  class  to  which  the  business  to  be  audited  belongs,  and  to  the  way  the  books 
and  accounts  are  kept. 

Some  auditors  check  all  po.stings  in  the  ledgers,  and  verify  all  extensions  and  footings  in  the  books  of  original 
entry.  Other  auditors  use  the  analysis  method  of  auditing,  by  which  all  general  ledger  accounts  arc  analyzed 
on  analysis  sheets.     This  method  is  preferable  for  certain  classes  of  audits. 

Preparation  for  Audit.  —  Before  beginning  an  audit  the  auditor  should  require  that  all 
postings  be  completed,  all  footings  be  inked  in,  all  balances  be  struck,  and  a  trial  balance 
of  the  general  ledger  and  abstracts  of  the  subsidiary  ledgers  be  taken,  as  of  the  termi- 
nating date.  The  trial  balance  and  abstracts  of  the  initial  date  should  also  be  in  the  hands 
of  the  auditor. 

Vouchers  for  all  payments,  and  all  other  available  vouchers,  should  be  arranged  in 
proper  order. 

When  possible  the  cash  on  hand  at  the  close  of  the  terminating  date,  excepting  petty  cash,  should  be  de- 
posited in  bank  on  the  succeeding  day,  and  the  bank  balance  should  be  reconciled  .is  of  the  terminating  date. 

Schedules  of  the  inventories  of  the  stock  and  other  property  on  liand,  duly  certified, 
should  be  ready,  as  well  as  a  list  of  notes  receivable  and  payable,  and  of  securities.  A  list 
of  all  overdue  accounts  should  also  be  prepared. 

A  trading,  profit  and  loss  statement,  if  a  trading  concern,  and  a  manufacturing, 
trading,  and  profit  and  loss  statement,  if  a  manufacturing  concern,  and  a  balance  sheet, 
should  be  prepared. 

And,  finally,  a  complete  list  of  all  books,  with  the  names  of  the  clerks  in  charge  of  them 
should  be  compiled. 

Order  of  Procedure.  —  The  first  step  to  take  in  making  a  commercial  audit  is  to  prove  the 
-cash  balance  of  the  terminating  date. 

Prove  Cash  Balance.  —  As  a  preliminary  to  this  .step  the  bank  book  should  be  left  at 
the  bank  to  be  written  up,  with  a  request  that  this  be  done  as  soon  as  possible.  If  the 
audit  is  begun  on  the  following  da\-,  and  all  cash  on  hand,  excepting  petty  cash,  has  been 
de|)osited,  the  check  book  and  ])etty  cash  book  (excepting  when  an  Imprest  Fund  account 
is  kept)  will  show  the  general  cash  balance  to  be  proved.  If  the  cash  has  not  been  de- 
posited, the  currency  of  the  terminating  date  should  be  counted  and  listed,  together  with 
any  items  that  may  be  carried  as  currency.  Ne.xt,  the  checks  on  hand  should  be  listed, 
after  having  been  compared  with  the  entries  in  the  cash  book,  which  entries  should,  of 
course,  be  within  the  term  of  audit.  The  amount  of  these  two  lists  should  be  added  to  the 
balance  in  the  bank  in  tiie  check  book. 


AUDITING  3]  3 

If  the  audit  is  begun  some  time  after  the  terminating  date,  and  the  cash  was  not  balanced  on  that  date,  tlie 
cash  should  be  balanced  and  proved  on  the  beginning  day.  To  this  amount  all  payments  since  the  terminating 
date  should  be  added,  and  all  receipts  deducted  to  find  the  terminating  balance. 

After  the  cash  balance  and  footing  of  the  general  cash  book  have  been  proved  and 
checked,  the  petty  cash  balance  should  be  proved  and  the  currency  listed,  if  no  Imprest 
Fund  account  is  kept,  and  the  footings  of  the  petty  cash  book  proved  and  checked.  A 
summary  of  the  cash  lists  is  sometimes  made  to  be  incorporated  in  the  report. 

Reconcile  Bank  Balance. — -The  bank  balance  should  be  reconciled  as  soon  as  the  bank 
book  is  returned  by  the  bank,  and  all  deposit  entries  verified.  The  vouchers  should  be 
inspected,  both  as  to  amounts  and  indorsements,  and  any  discrepancies  noted.  The  exist- 
ence of  the  checks  which  appear  to  be  outstanding  should  be  proven,  by  communicatino- 
with  the  payees,  unless  proper  vouchers  are  on  file. 

Send  Statements  to  Debtors.  —  Detailed  statements  of  the  open  accounts  in  the  sales 
ledger,  showing  the  balances  on  the  initial  date,  and  the  charges  and  credits  from  that  date 
to  the  terminating  date,  with  proper  explanation  of  each  item,  should  be  sent  in  self-addressed 
and  stamped  envelopes  to  the  debtors,  with  request  to  examine  the  statements  and  return 
them  promptly  to  the  auditor,  with  their  approval  or  disapproval,  and  nature  of  the 
same  noted  thereon.  When  these  statements  are  returned,  they  are  compared  with  the 
accounts,  and  such  accounts  as  are  found  to  be  in  agreement  are  marked  Correct.  Note 
should  be  taken  of  any  errors  or  omissions,  and  these  should  be  investigated. 

Request  Statements  from  Creditors.  —  Requests  should  be  sent  to  creditors  with  whom 
there  are  open  accounts  for  complete  statements  of  the  client's  account  covering  the  te'rn 
of  audit,  accompanied  by  self-addressed  and  stamped  envelopes. 

When  these  statements  are  returned,  they  are  compared  with  the  accounts,  and  such 
accounts  as  are  found  to  be  in  agreement  are  marked  Correct.  Note  should  be  taken 
of  any  errors  or  omissions,  and  these  should  be  investigated. 

While  the  statements  are  being  returned  and  received,  the  auditor  will  be  proceeding- 
with  the  auditing  of  the  other  accounts. 

Audit  Notes  Receivable. — The  notes  receivable  on  hand  should  be  carefully  examined 
to  see  that  none  are  fictitious ;  and  if  the  auditor  has  any  doubts  as  to  the  validity  of  a  note, 
he  should  communicate  with  the  apparent  maker,  and  obtain  from  him  a  verification  of  its 
genuineness  or  falsity  Notes  that  have  been  left  at  the  bank  for  collection  should  be  veri- 
fied by  obtaining  a  certified  list  from  the  bank.  The  notes  and  the  list  should  be  compared 
with  the  schedule  and  checked,  but  not  stamped,  and  the  footing  of  the  schedule  should  be 
checked  with  the  balance  of  the  Notes  Receivable  account.  Notice  should  be  taken  of 
any  past  due  notes  which  are  unsecured,  and  these  should  be  charged  back  to  the  accounts 
of  the  makers  through  adjustment  entries  in  the  journal  at  the  conclusion  of  the  audit. 

Some  auditors  when  so  authorized  frame  and  post  adjustment  entries  to  correct  errors  or  omissions,  as  these 
are  detected  in  the  progress  of  the' audit,  while  others  defer  this  work  until  the  concluding  stage  of  the  audit. 

Customers'  notes  which  have  been  discounted  and  not  paid  are  a  contingent  liability. 
A  list  of  these  should  be  made,  and  note  should  be  taken  whether  or  not  a  reserve  has  been 
provided  for  contingent  liabilities. 

If  any  securities,  such  as  stocks,  bonds,  etc.,  appear  in  the  assets,  these  should  be  care- 
fully inspected,  and  compared  with  the  schedule,  the  footing  of  which  should  be  verified, 
and  checked  with  the  account  or  accounts  in  the  ledger. 

This  concludes  the  preliminary  steps  usually  taken  in  making  an  audit. 


314  APPENDIX  I 

Audit  General  Cash  Book.  —  The  fccneral  cash  book  should  now  be  audited,  and  as  in- 
tentional errors  are  more  frequently  made  in  this  book  than  in  any  other,  the  auditor  should 
be  constantly  on  the  lookout  for  evidences  of  fraud  while  auditing  the  cash  book.  As  a 
special  precaution  against  overlooking  false  cash  entries  in  the  accounts,  the  cash  items 
in  the  ledger  should  be  checked  into  the  cash  book,  which  is  the  reverse  of  the  usual  check- 
ing procedure.  Note  should  be  taken  of  items  which  do  not  check,  cither  in  the  ledger  or 
the  cash  book,  and  proper  investigation  made. 

Debit  Side.  — The  debit  side  of  the  cash  book  should  be  audited  first.  The  balance  of 
the  initial  period  should  be  compared  with  the  cash  balance  as  shown  by  the  initial  trial 
balance,  and  checked,  if  found  to  agree.  The  cash  items  on  the  credit  side  of  the  general 
ledger,  including  the  controlling  accounts,  should  next  be  checked  individually  into  the  cash 
book,  and  if  there  are  any  available  vouchers  for  the  entries,  they  should  be  e.xamined  and 
the  entries  compared  with  them,  after  which  each  voucher  should  be  stamped  Audited,  to 
prevent  it  being  used  again  for  this  purpose. 

When  the  analysis  method  is  used,  the  accounts  in  the  general  ledger  would  be  analyzed  on  analysis  sheets 
before  the  auditing,  of  the  cash  book  is  begun,  and  the  cash  totals  would  be  checked  into  the  cash  book. 

Auditors  usually  stamp  audited  vouchers,  excepting  securitie.s,  notes  payable,  deed.s,  eto..  with  a  rubber 
stamp,  which  contains  the  word  .luditcti,  and  the  name  or  initials  of  the  auditor. 

The  entries  for  the  items  in  the  Accounts  Receivable  column  of  the  cash  book  will  re- 
main unchecked,  but  the  total  receipts  from  customers  during  the  term  of  audit  have  been 
checked  tlirough  the  controlling  account,  which  may  be  accepted  at  this  time  as  proof  of  the 
accuracy  of  the  items.  If  any  errors  exist  in  these  items,  they  will  be  found  when  the  state- 
ments sent  to  customers  are  returned. 

,'  When  other  special  columns  are  used,  such  as  Mdse.  Disct.  and  Sales,  the  items  in  these 
columns  will  of  course  also  remain  unchecked,  but  the  monthly  totals  will  be  checked  through 
the  accounts  in  the  general  ledger. 

The  footings  of  ail  of  the  columns  on  the  receipts  side  of  the  cash  book  should  be  verified 
for  the  entire  term  of  audit. 

Credit  Side. — After  all  the  general  column  entries  and  the  footings  of  the  special 
columns  of  the  debit  side  of  the  general  cash  book  have  been  checked,  the  credit  side  of 
that  book  should  next  l)e  audited  by  checking  the  debit  cash  entries  in  the  gener.il  ledger, 
including  the  controlling  accounts,  into  the  general  cash  book.  There  should  be  a  voucher 
in  some  form,  as  a  returned  check,  a  receipt,  or  a  canceled  note,  for  every  entry  on  this 
side  of  the  cash  book,  excepting  for  the  entries  representing  outstanding  checks ;  and  even 
for  some  of  these  there  may  be  receipts  or  acknowledgments.  All  returned  checks  should 
be  compared  with  the  entries  to  see  if  they  agree,  both  in  respect  to  name  of  payee  and 
amount,  and  the  indorsements  should  be  inspected,  after  which  the  checks  should  be  stamped 
Audited.  The  outstanding  checks  should  be  checked  from  the  reconciliation  of  bank  bal- 
ance against  the  entries  representing  them  in  the  cash  book,  and  the  entries  proved,  when 
possible,  by  recei[)tcd  invoices  or  other  vouchers.  The  receipts  for  currency  disbursements 
should  be  inspected,  compared  with  the  entries,  and  stamped.  The  collection  and  exchange 
items  in  the  cash  book,  or  on  the  collection  and  exchange  slips,  should  be  verified  through 
the  check  book  and  bank  book,  and  the  totals  through  the  general  ledger.  When  slips  are 
used  they  should  be  stamped. 

The  totals  of  the  Accounts  Payable  column  in  the  cash  book  are  checked  through  the 
entries  in  the  ledger,  and  the  entries  representing  tiiese  totals  are  checked  through  the  pur- 
chase ledger,  or  the  voucher  register,  when  the  Voucher  System  of  accounting  is  used. 


AUuniNG  315 

Audit  Petty  Cash  Book.  —  The  petty  cash  book  should  next  be  audited,  and  the  support- 
ing vouchers  inspected  and  stamped. 

Inspect  and  Stamp.  —  After  both  sides  of  the  cash  books  have  been  audited,  these  hooks 
and  the  general  ledger  and  the  purchase  ledger,  or  voucher  register,  should  be  ins|jei'ted  for 
unchecked  cash  entries.  If  any  e.xist,  they  should  be  noted  and  investigated.  When  the  cash 
books  have  been  audited,  the  auditor  should  stamp  or  initial  each  page  to  show  that  fact, 
and  this  should  be  done  with  every  book  audited. 

Verify  Abstract  of  Purchase  Ledger. — Verify  the  balances  as  shown  on  the  abstract  of 
purchase  ledger  with  the  accounts  in  that  ledger,  or  in  the  voucher  register,  checking  each 
account  found  to  agree,  and  then  check  the  footing  of  the  abstract  with  the  balance  of  the 
controlling  account. 

Audit  Purchase  Book.  -  In  auditing  the  jiurchase  book  —  invoice  book  (when  used  as  a 
book  of  original  entry),  purchase  journal,  or  voucher  register  —  the  footings  for  the  entire 
term  of  audit  should  be  verified,  and  the  totals  for  each  month  checked  with  the  controlling 
account.  The  credit  entries  in  the  purchase  ledger  accounts  should  be  supported  by 
invoices,  properly  certified,  and  the  debit  entries  by  returned  checks,  by  return  book  and 
allowances  book,  or  journal,  entries.  And  the  original  debit  entries  should  be  supported  by 
proper  vouchers,  which  should  be  examined. 

The  monthly  statements  from  creditors  will  serve  to  verify  the  accuracy  of  the  accounts  in  the  purchase 
ledger,  or  of  the  entries  in  the  voucher  register.  A  more  satisfactory  method  would  be  to  check  all  entries  for 
purchases,  direct  from  the  original  invoices,  and  all  credits  from  the  books  of  original  entries.  All  vouchers 
should  of  course  be  stamped  at  the  time  they  are  compared  with  the  entries. 

Audit  Voucher  Register. — The  entries  in  the  voucher  register  are  supported  by  voucher 
jackets  and  voucher  checks,  and  these  should  be  compared  and  checked,  and  the  vouchers 
stamped.  The  footings  of  the  columns  of  the  register  should  be  verified  and  checked 
against  the  accounts  in  the  general  ledger.  The  iteins  in  the  Miscellaneous  columns  should 
be  analyzed  and  checked  against  the  entries  in  the  analysis  book.  The  footings  of  the 
analysis  book  should  be  verified  and  checked  against  the  footings  of  the  proper  cohimns  in 
the  register. 

Verify  Abstract  Sales  Ledger.  —  The  next  step  to  take  is  to  verify  the  abstract  of  the 
sales  ledger,  by  comparing  the  balances  as  shown  thereon,  with  the  accounts  in  the  sales 
ledger,  checking  each  account  found  to  agree,  and  then  compare  the  footing  of  the  abstract 
with  the  balance  of  the  controlling  accoimt  checking  the  two  amoimts  if  they  agree,  and 
noting  any  changes  if  they  do  not  agree. 

Audit  Sales  Books. — Whether  sales  books  or  sales  journals  are  kept,  the  footings  for 
the  term  of  audit  should  be  verified,  and  the  monthly  totals  comj)ared  with  the  entries  in 
the  controlling  account.  It  is  not  usually  practicable  or  desirable  to  verify  the  extensions  or 
footings  of  the  individual  charges  in  the  sales  book,  as  it  may  be  assumed  that  these  were 
verified  before  the  bills  were  sent  out.  Neither  is  it  usually  practicable  to  check  the  indi- 
vidual charges  to  the  personal  accounts  in  the  sales  ledger.  The  balances  of  these  accounts 
should  be  checked  from  the  statements  sent  to  customers,  when  they  are  returned.  If  any 
are  not  returned,  the  accounts  which  they  represent  should  of  course  be  checked,  but  every 
effort  should  be  made  to  have  the  statements  returned. 

Audit  Return  Books.  —  All  entries  in  the  return  books,  both  purcha.se  and  sales,  should 
be  examined  with  the  vouchers  or  supporting  records,  and  checked  against  the  entries  in  the 


:;it;  APPKN'uix  I 

subsidiary  ledgers.     The  footings  should  be  verified  and  checked  with  the  entries  in  the 
controlling  accounts. 

Audit  Journal.  —  Special  care  should  be  taken  in  auditing  the  journal,  as  it  is  to  this 
book  that  resort  is  often  made  to  falsify  the  records.  As  now  generally  used,  the  journal 
contains  comparatively  few  entries,  and  these  should  be  authenticated  and  checked  against 
the  entries  in  the  accounts  in  the  ledgers.  Any  errors  or  doubtful  entries  should  be  noted 
and  investigated.  The  footings  for  the  term  of  audit  should  be  verified,  and  the  footings  of 
the  special  columns  checked  against  the  entries  in  the  general  ledger. 

Verify  Schedules. — The  schedules  of  assets  and  liabilities  not  already  verified  should 
now  be  examined.  The  auditor  should  see  that  the  inventories  of  merchandise  and  other 
property  have  been  properly  O.K.'d  and  certified  as  to  the  fact  that  the  property  repre- 
sented by  the  schedules  has  been  purchased  and  is  now  on  hand.  Also  that  the  merchan- 
dise stock  was  inventoried  at  prices  not  e.\ceedin<jf  the  original  cost  or  current  market  value, 
whichever  is  the  lower.  The  auditor  should  satisfy  himself  as  to  the  correctness  of  the  ex- 
tensions and  footings  of  the  merchandise  inventory  schedules.  This  he  may  do  by  making 
random  tests  on  the  schedules  :  that  is,  by  verifying  the  extensions  and  footings  here  and 
tliere.  If  correct,  the  total  footing  of  the  merchandise  inventory  schedules  should  be  checked 
with  the  corresponding  amount  on  the  profit  and  loss  statement,  and  on  the  balance  sheet. 

The  accuracy  of  the  other  property  schedules  should  be  verified  and  checked,  care  being 
taken  to  see  that  proper  allowances  were  made  for  depreciation.  Any  errors  or  omissions 
found  in  the  schedules  should  be  noted  for  adjustment.  All  accrued,  but  not  due,  assets 
and  liabilities,  and  all  prepaid  charges  (deferred  charges)  should  be  determined,  and  if 
any  were  omitted  from  the  records,  they  should  be  listed  and  noted  for  adjustment. 

Conclusion  of  Audit.  — After  all  of  the  books  and  supporting  records  have  been  audited, 
as  heretofore  explained,  the  books  of  original  entry  should  be  inspected  to  see  if  all  entries 
requiring  to  be  checked,  and  all  footings,  are  checked.  Note  any  errors  not  previouslv 
noted,  and  investigate  the  same.  The  accounts  in  the  sales  ledger  should  be  examined  to 
see  if  these  have  all  been  marked  "correct,"  to  show  agreement  with  the  statements  sent 
to  customers,  and  to  note  any  differences.  The  purchase  ledger,  or  the  Vouchers  Payable 
entries  in  the  voucher  register,  should  be  examined  in  the  same  way,  and  any  errors  noted. 

The  accounts  in  the  general  ledger  should  be  insjjccted,  and  refooted  for  the  term  of 
audit,  and  any  errors  noted.  Verify  tlie  trial  balance  by  checking  each  amount  against 
the  corresponding  account  in  the  ledger. 

For  the  jnirpose  of  rating  the  accounts  in  the  sales  ledger  into  the  tliree  classes,  "  good,  " 
"doubtful,"  and  "bad,"  the  auditor  may  obtain  assistance  from  the  credit  man,  or  some  mem- 
ber of  the  firm,  or  officer  of  the  corporation  ;  but  he  should  use  his  own  judgment  in  making 
the  ratings. 

Adjustment  Entries. — ^If  errors  were  detected  during  the  progress  of  tiie  audit,  these 
should  now  be  adjusted  to  bring  the  books  into  agreement  with  the  facts,  as  shown  by  the 
auditor's  balance  sheet.  This  is  done  by  framing  proper  entries  in  the  journal  and  posting 
them  to  their  respective  accounts.  The  data  for  these  adjustment  entries  will  be  found  in 
the  auditor's  notebook  and  on  his  working  papers. 

Preliminary  Trial  Balance.  A  preliminary  trial  balance  should  now  be  taken  of  the 
general  ledger,  as  of  the  terminating  date,  including  adjustment  entries;  also,  abstracts  of 
the  purchase  and  sales  ledgers,  and  these  should  be  compared  with  the  controlling  accounts. 


auoitinh;  317 

Profit  and  Loss  Statement.  —  A  trading,  profit  and  loss  statement,  if  a  trading  concern, 
and  a  manufacturing,  trading,  and  profit  and  loss  statement,  if  a  manufacturing  concern, 
should  now  be  made  out,  and  this  should  show  the  trading  activities,  or  manufacturing  and 
trading  activities,  the  revenues  and  expenses,  tiic  true  net  profit  or  net  Ions,  ami  tiie  dispo- 
sition of  the  profit,  or  the  adjustment  of  the  loss.  Proper  schedules  to  su]>port  the  state- 
ment should  also  be  made. 

Balance  Sheet.  —  The  balance  sheet  should  show  in  condensed  form  the  actual  assets, 
liabilities,  and  present  worth,  or  capital  and  surplus,  or  deficit,  of  the  concern  on  the  termi- 
nating date,  and  should  be  supported  by  proper  schedules. 

If  an  individual  or  partnership  concern,  the  assets  and  liabilities  are  usually  arranged 
on  the  balance  sheet  in  the  order  of  CLUTent  and  fi.\ed,  and  the  proprietor's  or  partnership 
items  are  placed  after  the  liabilities.  If  a  corporation,  the  assets  and  liabilities  are  stated 
in  the  order  of  fi.xed  and  current,  and  the  capital  stock  is  placed  before,  and  the  surplus 
after,  the  liabilities.     If  there  is  a  deficit,  it  is  shown  after  the  assets. 

Auditor's  Report.  —  After  the  audit  has  been  concluded,  the  statement,  schedules,  and 
balance  sheet  have  been  made  out,  and  the  books  are  in  agreement  with  the  same,  the  audi- 
tor should  make  a  statement  to  his  client  of  conditions  as  he  found  them.  Tliis  is  called 
the  "  auditor's  report." 

The  auditor's  report  usually  contains  a  balance  sheet,  styled  "  E.v-hibit  A,"  and  support- 
ing schedules,  which  are  styled,  "Exhibit  A — Schedule  i,"  "Schedule  2,"  etc.;  a  Profit 
and  Loss  statement.  Exhibit  B,  and  schedules;  and  a  copy  of  the  adjustment  entries. 
Exhibit  C.     If  the  report  is  unqualified,  the  balance  sheet  is  certified  by  the  auditor. 

The  foUovv^ing  is  the  usual  form  of  auditor's  certificate  attached  to  the  balance  sheet: 

We  have  examined  the  books  of  the  Wilson  Leather  Company  for  the  year  ending 
Dec.  31,  1910,  and  we  certify  that  in  our  opinion  the  above  Balance  Sheet  sets  forth  the 
true  financial  position  of  the  company  on  that  date,  and  that  the  relative  Profit  and  Loss 
account  is  correct. 

54  WiLH.\M  St.,  New  York,  Price,  Waterhouse  &  Co. 

Feb.   21,    191 1.  Chartered  Accountants. 

If  the  report  is  qualified,  the  balance  sheet  is  certified  subject  to  the  qualifications  set 
forth  in  a  separate  statement.  Exhibit  D,  and  "  This  exhibit  is  subject  to  the  qualifications 
set  forth  in  Exhibit  D"  is  written  at  the  bottom  of  the  balance  sheet.  Exhibit  D  contains 
comments  on  the  examination,  and  states  the  reasons  why  the  auditor  qualifies  his  certifica- 
tion as  to  the  correctness  of  the  assets  and  liabilities  shown  in  his  report.     It  also  frequently 

contains  suggestions  for  the  improvement  of  the  system  of  accounting  in  use  by  the  client. 

• 

EXERCISES 

The  following  exercises  are  intended  to  give  the  student  such  practice  in  auditing  as 
will  enable  him  to  thoroughly  comprehend  the  principles  of  the  subject,  and  to  become 
familiar  with  the  usual  procedure  in  making  a  commercial  audit.  While  the  schoolroom 
has  its  limitations  in  matters  of  this  kind,  as  compared  to  the  business  office,  the  books  of 
student  bookkeepers  provide  good  "cases"  for  the  student  auditor,  and  he  should  perform 
the  work  with  the  same  care  he  would  use  if  in  actual  practice. 

For  all  working  papers,  notebooks,  and  reports,  loose  paper  may  be  used.  If  no  rub- 
ber stamp  is  available,  the  student  will  write  Audited  and  his  initials  where  the  stamp 
would  be  used. 


318  APPKNUIX    I 

1.  Audit  the  books  of  Taylor,  Wood  &  Co.  for  August  or  for  September  (whichever 
your  teacher  may  direct),  which  will  represent  a  fiscal  period. 

Apply  to  your  teacher  for  the  books  and  supporting  records  of  some  other  student,  and 
having  obtained  them,  read  again  "  I'reparation  for  Auditing,"  page  312.  Next  proceed 
with  the  auditing  in  general  accordance  with  the  instructions  given  in  '"Order  of  Proce 
dure,"  page  312,  and  following  paragraphs.  Vou  will  not  be  required  to  send  statements 
to  debtors,  or  requests  for  statements  from  creditors.  Only  such  vouchers  as  would  be  oi 
hand  in  actual  business  should  be  used  in  making  your  audit.  Separate  the  others  from 
these. 

You  are  at  liberty  to  use  either  the  straight  checking  method  or  the  analysis  method  o*' 
auditing  in  performing  this  work.  If  you  decide  to  use  the  analysis  method,  prepare  an 
analysis  sheet  as  one  of  your  working  papers,  and  analyze  the  accounts  in  the  general 
ledger.  X'erify  the  original  entries  by  the  vouchers,  and  check  the  totals  of  the  columns  of 
the  books  with  the  totals  of  the  corresponding  columns  on  your  analysis  sheets. 

Make  careful  notes  in  your  notebook  of  any  errors  which  you  detect,  but  do  not  make 
any  corrections  in  the  books.  After  completing  your  audit,  make  a  report  including  the 
necessary  e-xhibits  and  schedules.  In  making  E.xhibit  15,  show  the  results  in  condensed 
form  only,  and  give  the  details  on  the  schedules.  That  is,  show  the  gross  revenue,  the 
operating  expenses,  and  other  deductions  from  revenue,  the  net  profit,  and  the  disposition  of 
the  same. 

Hand  the  report,  exhibits,  and  schedules,  together  with  tiie  books  and  the  vouchers,  to 
your  teacher. 

2.  Audit  the  books  of  tlie  W".  J.  Milton  Shoe  Company  for  December,  which  will 
represent  a  fiscal  period. 

Apply  to  your  teacher  for  a  set  of  books  and  accompanying  vouchers,  and  proceed  as 
instructed  in  No.  i.  Strive  to  improve  on  your  previous  effort,  and  take  special  pains  with 
your  report. 

Make  E.xhibit  A  in  consolidated  form.  That  is,  state  the  different  assets  and  liabilities 
in  totals,  and  when  necessary  sujiport  by  schedules.  This  applies  particularly  to  the  current 
asset  inventories,  and  also  to  the  Accounts  Receivable,  Notes  Receivable,  etc. 

In  making  lOxhibit  B,  show  gross  sales,  returned  goods,  net  sales,  cost  of  net  sales 
(support  by  Exhibit  B,  Schedule  i,  which  will  show  the  Manufacturing  account  in  detail), 
gross  profit  on  trading,  and  state  the  percentage  on  sales  and  on  cost.  Show  also  the 
deductions  for  selling  expenses,  total  selling  ex])enses,  and  i)ercentage.  based  on  the  gross 
profits;  the  deductions  for  general  and  administrative  expenses,  total  of  the  same,  and  the 
net  profit  on  trading. 

•Hand  your  report,  together  with  the  books  and  vouchers,  to  your  teacher. 

QUESTIONS 

1.  Explain  wliat  is  meant  bv  (i/)  ••auditing."  (/>)  •'audit.""  (<)  '•auditor." 

2.  Of  what  is  C.  P.  A.  the  abbreviation  ? 

3.  Explain  how  a  person  may  Ijeconie  a  C.  P.  A.  in  your  slate. 

4.  What  is  the  principal  object  of  an  audit  ? 

5.  What  is  meant  by  "term  of  audit."  and  wh.at  may  it  be  ? 

6.  Wliat  are  the  names  of  the  first  and  last  dates  of  the  audit  term  ? 

7.  Name  the  different  kinds  of  audits  as  regards  (a)  time  when  made,  and  (d)  classes  of  business  or 
activities. 


AUDITING  319 

8.    What  are  the  duties  of  an  auditor  ? 

g.    What  is  meant  bv  an  "auditor's  worlving  papers"  ? 

10.  Name  and  e\:i;ain  the  errors  tlie  presence  of  which  an  auditor  sliould  detect,  or  the  absence  of  wliicli 
he  should  prove,  in  malting  an  audit. 

11.  State  what  prepar.itiou  should  be  made  for  an  audit. 

12.  State  briefly  the  steps  to  take  in  making  a  commercial  audit. 

13.  How  is  the  cash  proved  when  the  audit  is  begun  some  time  after  the  terminating  date  .' 

14.  What  book  or  books  should  an  auditor  e.\amine  with  special  care  for  the  detection  of  intentional  errors  ? 

15.  What  evidence  should  an  auditor  generally  require  that  the  original  entries  are  in  accordance  with  the 
facts  ? 

16.  How  do  auditois  indicate  that  the)-  have  e.Kamined  an  entry  ?  a  vi'icher  ? 

17.  What  should  be  done  when  an  error  is  detected  in  nuking  an  audit  .•" 

18.  How  are  the  books  brought  into  agreement  with  the  facts,  as  lound  by  the  auditur  ? 

ig.    What  does  the  auditors  report  contain  ? 

20.    If  the  auditor  is  unable  or  unwilling  to  certify  to  the  accuracy  of  the  balance  sheet,  how  may  he  indicate 
that  fact  ? 


AIM'ICXDIX  II 

BILLS  OF   LADING 

Upon  the  r.  '        n  of  the  Interstate  Cummcrce  Commission,  there  were  adoptee 

in  iO"i^  iinifiinu  ii;,  as  follows: 

set  to  be  used  in  connection   with    "  straight  "   shipments,   consisting  of  bill  o 
lading,  hhi|jping  order,  and  memorandum  acknowledgment  (all  to  be  printed  on  white  paper] 

(f>}  One  set  to  apply  to  "order"  shipments,  consisting  of  order  bill  of  lading  (to  b 
printed  on  yellow  paper),  shipping  order,  and  memorandum  acknowledgment  (the  last  twi 
forms  to  be  printed  on  blue  paper). 

Gixxls  sent  as  a  "stnviglit"  slii])n"  "'  "'i^  !"•  il.liMnd  i.i  the  consignee  without  his  surriiideriii';  ih 
kill  of  lading. 

On  the  other  hand,  an  "  order  "  shipnicul  is  consigned  to  "  Order  of ,  "  and  an  orde 

bill  of  lading  contains  the  provision  that  "the  surrender  of  this  original  order  bill  of  ladiu] 
proi)erlv  indorsed  shall  be  required  before  the  delivery  of  the  property.  "     (Sec  opposite. 

The  order  bill  of  lading  is  negotiable  by  indorsement,  while  the  straight  bill  of  lading  i 
not  negotiable.  Order  bills  of  lading  are  much  used  in  shipping  by  freight  goods  that  ar 
not  to  be  delivered  until  paid  for.  Payment  is  often  made  through  a  local  bank,  to  whos 
order  the  goods  are  consigned,  and  to  which  the  order  bill  of  lading  is  sent,  together  with 
draft  on  the  piirchaser  of  the  goods,  which  must  be  paid  before  the  bank  will  give  him  th 
bill  of  lading. 

Carriers  will  supply  shippers  with  these  forms,  l^ut  for  convenience'  sake,  a  shippe 
may  pre])are  his  own  bills  of  lading  with  his  name  and  list  of  commodities  printed  thereor 
jirovided  such  forms  contain  the  ])recise  language  of  the  uniform  contract  and  condition; 
and  conform  to  the  essential  requirements,  such  as  the  titles  of  the  respective  forms,  th 
color  distinction  for  "order"  shi])mcnts,  the  provision  for  shijiper's  signature,  and  th 
jjrescribed  width  of  8.1  inches  (the  forms  may  be  of  any  length  desired). 

The  shipper  may  elect  to  ship  under  the  terms  and   conditions  of  th<5  uniform  bill  c 
lading  and  shiiijiing  order,  in  which  case  the  rates  provided  in  the  official  classification  an 
tariffs  will  aiii>ly;  or  he  may  elect  not  to  acce])t  the  conditions  of  the  new  uniform  bill 
lading  and  shijjping  order,  in  which  case  the  property  will  be  transported  at  carrier's  liabilit 
and  the  charge  therefor  will  be  ten  ])er  cent  higher  than  the  former  rate. 

Draft  with  Attached  Bill  of  Lading.  The  principal  use  of  the  order  bill  of  lading 
where  the  s!iii)per  desires  to  collect  from  consignee  in  advance  of  the  delivery  of  goods  I 
him.  This  is  known  as  "shipper's  order."  and  accomplishes  the  same  purpose  whe 
goods  are  shii)ped  bv  freight  as  C.  O.  U.  by  express  does  when  shipment  is  made  by  e. 
press.  The  name  of  the  bank  through  which  the  collection  is  to  be  made  is  inserted  aftt. 
"Consigned  to  Order  of "  and  the  name  of  consignee  after  "  Notify."  A  draft  is  drawn  o 
the  consignee  for  the  amount  of  the  shipment  in  favor  of  the  bank  and  attached  to  the  bi 
of  lading.  The  draft  with  bill  of  lading  attached  is  left  with  the  bank  for  collection.  Cni 
signec  cannot  obtain  possession  of  bill  of  lading  unless  he  pays  the  draft,  and  without  th 
bill  of  lading  he  cannot  get  possession  of  the  goods.     Thus  we  have  C.  O.  D.  by  frei^hi 

The  invoice  is  .sent  to  consignee  in  the  regular  wav  with  terms  " Rv.  S.  D.  H.  L. 

3-.;' I 


ORDER    BILL   OF    LADING 


321 


UolfonD  BUI  of  Lading— Standard  torm  of  Ordtf  Bill  of  Lading  approved  by  tho  Interstata  Commerco  CommUtlon  by  Ordv  No.  787  of  Judo  27, 1908. 


/i 


-7<L- 


r 


f^^'- 


-?-Z.tL^r7_,- 


Railroad  Company. 


ORDER    BILL   OF    LADING— ORIGINAL. 


Shippers  No.. 
^Agents  No. — 


K£C£1VED,  subiect  to  the  cb^ificationa  and  tariSs  in  e&'ect  oq  the  dule  of  issue  ot  this  Origiool  Bill  of  Lading, 


at.- 


':^:^t<t^-C--2^^r:i£::CZ^ 


troM- 


^■^^.'^ 


:^. 


C.^riZ^,.../.'^, 10.. 


'IV'i. 


or aeUi-  ■ 


r:r. 


7 


/-rl' rr.:2«2,=cfcr _.   .. 

lU'Bl*  Of  packaeeiunL-DoiTD).  mnrki'd.  tODticDed  anj  destined  as  indlut'eii  b, , ..^ ,.  , ,     ,  ,, 

'  ■  rwiM  lod^UvrTloanc-tbcr  CArner  ciD  tbe  route  to  sitid  dcatiniitlon     It  t»  rnulually  asicrd  us  to  net,  .  ,    .  ,     ,      ,,r   i  ,   i 

u.iuon.  ind  islocafti  parlj  nl  any  lime  lolertMed  in  all  or  an  vol  enid  properlT.  Ihlt  c%»ri  strvii-ii  t  .  ■  i    '.i  »r  r    r 

■' ;   I  I  ->i,:d  or  wrllieii,  nerem  cooulood  iiucludins  condiuoos  on  tuck.  Iierooli,  ftodnlucb  &ro  affreea  toby  Hj.'  -tnj  j..'i  .,  i,  \  .i,  .  .[.u'U  lor 

The  lutTtndcr  of  thU  O'ieinai    O^^C^    Bill  of   Ladine  properly  indorsed  shall  be  required  before  the  delivery  of  the  property.      Inspc>:liiin  of  rropcrty  covered 
b>  Ihl*  bill  of  Ikdidt  «ill  not  be  pcrmiflcil  ualcs&  provided  by  law  or  uoleu  pcfmiuioo  u  Lndoricd  on  thu  original  bill  ol  ladanc  or  given  ia  wrllinf  by  Iho  shipper. 


J7i«  RaiQ  oi 

'  Freight  from-.-. 

is  in  Cents  per  100  Lbs. 

IF  Sptclal 

P« 

IF  SHdH 

IF-.TImasUt    IF  III  CUu 

IF  U  Clus       IF  Ru)a   7i 

\  If   3d  Clau  ' 

IF  Ruls  2B 

IF  Rida  2E        If  4th  Clan 

IF  Sth  Cim     IF  6ltt  Clau 

PIT 

.   1        1 

Consigned  to  ORDER  OF 

Dcslinalion 

Notify 

At -i^;?r2;:Z2rz'r^2.^d.:i<z^::2i^^ 

Route, 


DESCRIPTION  OF  ARTICLES  AND  SPECIAL  MARKS 


WEIGHT 
Subject  to  Correction) 


...LG.S'.a........ 

jij:... 

>^.j:.. 


If  charges  are  to  be  prepaid, 
w-nle  or  slamp  here,  '"To  be 
Prepaid." 


Keccived  S _.     .. 

to  apply  in  prepayment  of  the 
charges  on  ihc  properly  dc- 
scifbed  hereon. 

Aseai  or  CasLier^ 


Charges  Advanced; 

$ 


Z<=^c;K>Z-c^!r:. Shipper. 


(Tbia  bill  ol  l«riing  i»  to  be  aicned  by  the  abipper  aad  ugeal  of  tbe  comer  iisauig  si 


For  use  In  connection  with  the  Standard  form  of  Ordor  BUI  ol  Lading  apirovBd  by  Uw  Interstato  Commerco  Commission  by  Order  No.  787  of  iune  27. 1908. 


/? 


/^y<><*c.<^^.^^.^-2^-->'^-^''*z-"^       Railroad  Company. 

■TLJIC    MPMnRAMnilM    ts  •»  adcnowl/dgment  that  a  bill  of  ladlnz  has  been  Issued  and  Is  not  the  Shippers  No 

iniO     IVI  tlVlV./r»«|-»wwi»»  OrlElnal  Bill  of  Lading,  nor  a  cop^  or  duplicate,  covermg  tho  property 

named  herein,  and  Is  intendea  solely  for  Ming  or  record, r_?^'}?^"*'- 


KECEiVED  subject  to  ihe  classi6atlioni  and  tariffs  in  effect  on  the  dale  of  the  receipt  by  the  earner  of  the  property  described  in  the 


^^J<?^.../.,%.^......W_.. 


pIBccol  Uellvf ft  31  Mid  de ill fii lion,  ir  on 
propvrtr  a-n  -li  or  juJ  poillo.n  ol  Kiid  r 
sh*ii  i»e  ttiniri-'i  !<'  >>ii  tiie  coadiuoa^.  v 


or  pickftses  unkDO' 


las  coniUUOQS  o 


iPtl   hfrpundrr 
d  accepted  (ut 


cr  ol  the  Oiigtnal    ^PV^KM    Bill   ol   Lading  properly  indorMd  shall  be  required  bernre  Ihc  delivery  of  Iho  properly.      Inspection  of  property  covered 
K  wiU  ool  be  permiiied  unleu  provided  by  law  or  unlcM  pcnniuiOQ  u  ladorsed  on  Ibe  orixiaaJ  biU  ol  lading  or  given  in  writing  by  ibc  thippcr. 


For  use  In  connection  wrtn  tne  Standard  form  of  Order  Bill  of  Lading  approved  by  the  Interstata  Commerce  Commission  \)^  OfOer  No.  787  of  June  27, 1908. 

/::k^?^^;-.^^z<^-^-^^^t^<.^c^^'^      Rail  road  Com  pa ny. 

THIS    SHIPPING    ORDER    ""^  ^  '•^"''y  ''"*"'  '"■  '"  '"''•  '"  '""leHblB  pencil,  or  In  Cabori,  and         Shippers  No 

f  taio>d  by  the  AgonL  AgfiHtS  NO 


RECEIVf;,  Bubject   to  the  classificatjons   and  tari&s  io  effect  on  the  data  of  issue  of  ihia  Shipping  Order. 

at — ''X^^^Syt>c<z^el^ij>JL^t^,  /!^^ /2l.'Zi^..j  y ,_ Ao. 

t'ooiiinjid"  a  o  d'd  esli  ne  d'iii"! 

,  ..  -^^inMioii     ,1,,  mmuniiy  «m*m.B»if.*»fUoiirler  ol  all  .> 

lorai.yof  E»iJ  prunvtlT.  ihaii-vPri  wrvlre  Io  Uo   boiloinx; _,._    . 

acctpied  lor 


placeof  dellvtrrat 

ptoMrtrovFr  all  oraoT  portiou  ot  uid 
■h,ili  M  »iibipci  Io  all  loa  ci>odiuou».' 
bunaWaod  r»sa*Ucns 

The  surrender  ol  Ihe  Original 
by  the  bill  of  lading  wilt  ool  b«  perm. 


'-'■•' *  -    nlccla  ot  pacliaB«»  uiiknoac 

:  ^    Bill   of   Ladinr  properly  indorsed  shill  be  required  bclire  the  delivery  of  (he  property.      Inspection  of  proptrty  covered 
Kovidcd  by  law  of  unlcis  pemuu.on  .s  indorsed  on  the  original  bill  ul  lading  or  given  ir)  wrinng  by  ihc  shipper. 


....... ,,.,_ the  prop^rlr describe!* betniT.tTiiipp-t rent  oood 

■minatioii  Hi*  muiually  ai(i«e<i.asin«afh  oiirler  olall'irany  o"a4ti| 
orai.TOf  =»'J  prup^tly.  iha-evpri  wrvlre  Io  Uo  i^oiloinx-i  t,^i*,i..rJrr 
Lick  lieieoli.  and  wliicb  aill  agiceil  lo  by  inoahtvperi 


322 


An  Indorsement  is  liic 
of  iKyotiubio  iiapir,  such 

Forms  of  Indorssmext 
ni.As 


^hcA-.  n.  J.- Ill 


I'll 

"■ 

1 

'7ixif  to 

( 

1 

/ 

a. 

rj>fyL>K 

QiAI.IFIF.II 


IVUAou: 

ol^lOi.    CI.    r9.-l^t.T. 


KrsxKXK 

TIVE 

'■'/ 
-^ 

Fl)K   Df.iiisit 


AITI'VDIX    II 

FORMS    OF    INDORSEMENT 

wriling  ol  one's  name,  witli  or  without  othjr  words,  on  the    ':i'"k 
as  notes,  drafts,  cheeks,  etc. 

The  forms  of  indorsement  in  most  general  use  are  the  L  ink 
and  the  full  indorsement. 

Blank  Indorsement.  —  To  indorse  a  j)apcr  in  blank  co:  -ts 
in  wriiiiij,-  one's  name  across  the  back,  without  any  other  w- 

Full  Indorsement.  —  A  full  indorsement  consists  in  writing 
on  the  back  of  a  negotiable  paper  aa  order  to  pay  to  the  order 
of  a  jjarticular  person,  signed  by  the  payee  of  the  paper.  This 
is  the  safest  kind  of  indorsement,  as  the  paper  cannot  be  col- 
lected without  the  indor.sement  of  the  indor.see. 

When  a  paper  is  indorsed  in  blank  as  above  described,  the 
person  who  receives  the  paper  may  write  above  the  name  of  the 
indorser  the  necessary  wording  to  make  it  a  full  indorsement. 

Other  forms  of  indorsement  are  the  following : 

Qualified  Indorsement.  —  This  is  often  called  an  indorsement 
■•  without  recourse."  It  may  be  either  blank  or  full.  The 
words  "  without  recourse "  written  above  the  indorser's  name 
have  the  effect  of  relieving  him  from  responsibility  for  the  pay- 
ment of  the  ])aper. 

Restrictive  Indorsement.  —  A  restrictive  indorsement  restricts 
the  payment  of  the  paper  to  some  particular  person  named,  by 
omitting  the  word  "  order  "  and  adding  the  word  "  only  "  to  the 
full  form. 

Indorsement  for  Deposit  or  Collection.  —  When  a  paper  is  left 
at  the  bank  for  collection  or  for  deposit,  this  may  be  indicated 
by  writing  "  For  Collection  "  or  "  For  Dejjosit,"  above  the  in- 
dorser's name,  although  some  banks  object  to  this. 

Where  and  How  to  Indorse  Name.  —  As  a  matter  of  business 
custom  and  convenience,  all  indorsements  should  be  placed 
across  the  back  of  the  left-hand  end  of  the  paper,  about  one 
and  a  half  inches  down  from  tTie  end. 

In  indorsing  one's  name  on  a  note  or  draft,  one  should  write 
it  exactly  as  it  is  in  the  face  of  the  paper,  and  if  this  differs 
from  one's  usual  signature,  or  contains  errors  of  any  kind,  the 
correct  signature  should  be  placed  immediatelv  underneath  it. 
F"or  instance,  if  a  check  is  made  payable  to  Henry  C.  Miller, 
while  the  payee's  customary  business  signature  is  H.  C.  Mueller, 
be  should  first  indorse  his  name  as  Henry  C.  Miller  and  then 
place  his  correct  signature  under  it. 


INDEX 


Abstract,  of  analysis  book,  2SS 

of  card  ledger,  16S 

of  customers' ledger    177 

sales  book,  154 

sales  sheet,  153 
Acceptance,  log,  in 
Account,  defined,  34 

accrual,  300 

allowances,  295 

bank,  58,  193 

bills  payable,  29,  30 

bills  receivable,  2S,  30 

cash,  1 1 

C.  O.  D.,  92 

collection  and  exchange,  141,  142 

consignment,  1S2 

controlling,  188,  224 

discount,  Si,  120 

exchange,  141,  144 

expense,  1 1 

freight  inward,  233 

freight  outward,  294,  295 

good  will,  265 

interest,  46,  123,  129    ' 

loss  and  gain,  41,  42,  212 

manufacturing,  272 

merchandise,  12,  13,  27 

merchandise  discount,  77,  79,  127 

profit  and  loss,  240 

proprietor's,  1 1,  27 

purchases,  272 

real  estate,  46,  82 

royalty,  294 

sales,  272 

securities,  234 

surplus,  260 

trading,  2i6,  240,  246 
Account  books,  133 
Account  sales  register,  189 
Accounting,  150 
'Accounts,  analyzing,  224 

business,  34 

corporate,  special,  264 

division  of,  224 

finance,  35 

nominal,  224 

payable,  167,  216 

personal,  22,  224 

real,  224  • 

receivable,  167,  216 

reserve,  244 
Adding    machine   exercises,    iSo,   214, 

255.  30S 
Adjustment  entries,  316 
Allowances,  295 
Analysis  book,  272,  285,  288 
Appendix  I,  31 1 
A]Hiendix  II,  320 


Articles  of  copartnership,  133 
Assets,  225 
Auditing,  31 1 
Auxiliary  books,  133 
Auxiliary  ledgers,  18S 

Bad  debts,  reserve  for,  244,  246 
Balance  ledger,  222 
Balance  sheet,  148,  226,  244,  301 
Bank  balance,  reconciliation  of,  194 
Bank  liiscouni,  80 

exercises  in,  105 
Bank  draft,  III-I13 
Bank  pass  book,  66 
Bill,  55,  56 

Bill  and  charge  system,  222 
Bill  book,  115,  122,  222 
Bill  of  lading,  8S-9C,  205,  320 
Blotter,  161,  198 

sales  from,  198 
Bonds,  259,  260 
Bookkeeping,  5,  150 
Burden,  281 

distributing,  282 
Business  practice,  53 

Capital  stock,  259 

working,  260 
Cash,  flefined,  1 1 

check,  119 

differences,  220 

discount,  82 

in  balance,  58,  59 

proving,  220 

register,  154 

sales,  154 
Cash  book,  72,  156,  190,  218,  238,  277 

petty,  277,  292 
Changing  from  single-  to  double-entry, 

16S 
Check,  61,  62,  119 

book,  59 

dividend,  264 

stubs,  59,  62,  63,  65,  193 

voucher,  274 
Checking    from   journal  to  ledger,  25, 

26 
Ciphers  in  cents'  column,  68 
Circular  letter,  form  of,  195 
Closing,  by  journal  entries,  245 

books  of  original  entry,  20S,  238 
C.  O.  D.,  91,  92,  232 
Commission  business,  1S2 
Consignments,  1S2-184 
Contingent  liability,  225 
Corporations,  257,  258 

books  of,  262 

officers  of,  261 

32o  (complete) 


Cost,  keeping,  272,  279-281 
Credit  memorandum,  237 

Day  book,  1 34 
Deposit  ticket,  59,  65 
Depreciation,  244,  300 

reserve  for,  244 
Discount,  how  reckoned,  80 

exercises  in,  105 

kinds  of,  82,  127 
Discount  memorandum.  Si 
Disposition  of  products,  271 
Dissolution  of  partnership,  239,  252 
Distribution,  285. 
Dividend  book,  263 
Dividends,  260 
Draft,  107-H4 

with  attached  bill  of  lading,  320 
Drawee,  of  ilraft,  107 
Drawer,  of  draft,  107 

Errors,  correction  of,  19,  33 

how  to  find,  32,  33 

kinds  of,  311 
Exercises,  49,  70,  105,   141,   179,  212, 

253,  268,  305,  317 
Expenses,  administrative,  224 

classifying,  272 

general,  224,  2S6 

manufacturing,  272,  286 

selling,  224,  272,  286 
Express  C.  O.  D.,  232 
Express  money  order,  93,  94 

Factory  system,  271 

Findings,  2S3. 

Finished  goods,  271,  282,  285 

Flour,  Grain,  and  Produce  business,  5^ 

F.  O.  B.,  291 

P'ooting,  pencil,  18,  19 

Forwarding,  S3,  84,  234 

Freight,  charges,  197 

C.  O.  D.,  232 

prepaid,  293,  294 

Gain,  delined,  34 

net,  how  found,  35 
Goods  in  process,  282 
Good  will,  265 
Government  supervision,  258 

Hardware  business,  141 
Holding  companies,  257 

Impression  book,  letter,  193 
Imprest  fund,  277. 
Index  book,  134 
Indexing,  193 


:V2{ 


INDKX 


Inlcmt,  exrrcitrs  in,  105 
on  |>artncr>'  invmmcnts  244 

Inventories,  239 
•umtry,  246 

Inventory,  34,  168 
ixrpctual,  27S 

Invoic,  55,  j6 

Inroicc  Ux'c,  115,  221,  238 

Invoices  record  of,  873 

Jonmal,  151,  216,  33S 

purcbavr,  321,  24S 

ul<:«.  221,  24.S 
Joarnal-day  IkmiU,  5-7,  II,  47-49 
Joarnali/in^;,  10;   kc  Rulct 

Ijitxir,  ilircii,  28l 

inUirecl.  281 

ticket,  280 
|jul«  anil  patterns  283 
I>c<lj;er,  5,  8,  9,  13,66 

account  canicil  forwanl,  84 

account  tile,  158 

auviliary,  iSS 

lial.incc,  222    ^ 

catil,  1 58,  100 

closing,  37-45.  212,  304 

cl'xing  by  journal  entries,  245 

cunsignmcnl,  1S4 

cost,  281 

customers',  66 

|;cDeral,  222 

index,  134,  193 

looic-leaf,  1 58 

private,  224 

purcha.se,  222 

sales  222 

sectional,  18S 

sclf-hnlancinfr,  223 

shipment,  185,  2oS 
IJabilities,  34,  138,  225 
Iaiss  and  gain,  <lelincd,  34 

ManufacturinR,  271 
Material  requisition,  280 
Materials,  283 
Minute  Iwok,  262 

Note,  promissory,  27,  29,  63,  80 
Notes  paynlilc,  151,  iCm; 
Notes  reccivaMc,  151,  169 
Notice  of  dissolution,  133 

Oroci  liill  of  lading,  205,  320 
Orders,  approval  of,  230 

liack,  230 
( irgani/ation,  factory,  271,  283 
Original  cnlry,  books  of,  134 
(Nreihcad  charges,  2S1 

I'ass  book,  66 

I'ayee,  of  draft,  27,  107 

l-ay  roll,  281 

I'etty  cash  txiok,  277,  292 


.  .■■o,  IK,  134,  K-.'.  .  ,  ,.  ■■■•„ 
.■.>S 
4     ■  i.ni  »alcs  register,  2co,  2oS 
cash  Ikh.W,  200,  20S 
dail>'.  231 
linal,  20S 

h       ■       '      '.  25,26 
in  .  100,  208 

jouin.ii.    .1"' 

proof -.f,  151 

sales  iHHik,  200,  208 

shipment  leilger,  208 
IVisImarking,  14,  86 
Power  of  attorney,  53 
Preliminary  work,   itxi,  168,   194,  225, 

247,  2S6 
Pic'eiit  »orth.  36,  37 
Price  lists,  (K/.  102,  137,  147 

for  ilry  gmids  business,  228-229 
Principal  books.  133 
Process  goods  in,  2S2 

inclliod,  279 
Pro«luctti»n,  271,  283 

niclhoils,  279 

onler,  280 

order  nielhoil,  279 

reports,  282 
Proof,  of  posting,  151 

of  lri.d  balance,  43 
Propositions,  265 
Proving  cash,  220 

b,alancc,  312 
Purchase  book,  155 

i0urn.1l,  221,  248 

ledger,  222 

order  blank,  273 
Purchases,  221,  272 

returned,  234 

Questions,   20,  45,  69,    104,   137,   iSl, 
214.  256,  270,  309.  31S 

Receiving  book,  1S3 
Red  ink,  35,  43,  83 
Resource,  34,  138 
Retail  grocery  business,  151,  1 68 
Return  books,  234 
Royally  system,  294 
Rules  for  journali/ing.  summary,  46 
Ruling,  general  directions,  4 
exercises  in,  5,  20,  26,  40 

Sales,  abstract  of,  1 54 

Sales,  liook,  73,  74,  78,  iSS,  221,  23S 

cash,  154 

from  blotter,  19S 

journal,  221.  24S 

ledger,  t)0,  222,  223 

posting,  2CX3.  20S 

returned,  234 

sheet,  abslr.ict  of,  153 

slip,  151 

Shipments.  124,  182 

rule  f  T,  I  S3 

'("MI'LETe) 


shipper's  order,  232 

Shipping  business,  1S2 

Shoe  manufacturing  business,  282 

Single-entry,  151 

changing  to  double-entry,  16S 
Sinking  fund,  260 
Statement,  business,  3},  34 
customer's,  67,  68,  157 
financial.  33.  35 
nianufaciuring,    trading,   protit    and 

loss,  301 
of  losses  and  gains,  177,  209 
proprietor's,  ibS 
resources    and    liabilities,    167,   177, 

211 
trading,  profit  and  loss,  240 
Stock,  bock.  134,  135 
capital,  25*> 

certificate  book,  262,  263 
certificates,  259 
common,  259 
I       keeping,  239,  272,  278 

kinils  of.  259 
I       ledger.  263.  27S 
I       outstanding,  259 
I       preferred,  259 
I       report,  272 
i       taking,  34 
I       transfer  book,  263 
treasury,  259 
unissued,  259 
Subscription  book,  263 
Supporting  records,  228 
Surplus,  260 

Tea,  cort'ee.  and  spice  business,  72 
Telegram,  90 
Terminology,  150 
Test  ledgers  44.  45 
Trade  discount,  127 
Transactions,   161,  170,  197,  230,  248, 

290 
Transfer  book,  263 

agents,  264 
I  Trial  balance,  17,  32,  177,  23S,  287 

how  to  find  errors  in,  32 

post-closing,  247 
Trusts.  25S 
Turnover,  216,  240 

1  Voucher,  check,  274 
iackct,  274 
register,  276 
system,  274 
Vouchers,  53 

Wage  systems,  281 

Wholes.ile  carpet  business,  134 

Wholesale    dry    goods    business,    216, 

247 
Wholesale  grocery  business.  115 

Wholesaling,  216 


UNIVERSIT" 


THIS  BOOK  IS  DUE  ON  THE  I.a«. 

STAMPED  EeX^'^^^^^ 

--  i^'Iies'-s.o'''^    °^     25    CENTS 

TH.S  BOOK  oTth'"  o:;/n ''""^  ^°  "^-"N 
^"-L  INCREASE  TO  s^  J^  °''^-  '^"^  PENALTY 
DAY  AND  TO  J  00  o^-  ^^  °'^  -^"^  ^OUR^^ 
OVERDUE.      *  ■°°  °'^  THE  SEVENTH  oly 


fi  7933 


SEP    S71935 
21AUG'52CF 
^    7  795?  J.  ^ 

MAR  2  5  ]983l 

rec'd  cira  MAR  7     1983 


UJ  21-2,„.i,.33  (52m) 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 


